12300 LIBERTY BOULEVARD | ENGLEWOOD, CO 80112
720.875.5400 | WWW.LIBERTYMEDIA.COM
LIBERTY MEDIA CORPORATION
2017 ANNUAL REPORT
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BOARD OF DIRECTORS
AUDIT COMMITTEE
Series B Liberty Braves Common Stock
(BATRB) and Series B Liberty Formula
One Common Stock (FWONB) are quoted
on the OTC Markets.
Retired Head of Communications,
David E. Rapley (Chairman)
John C. Malone
Chairman of the Board
Liberty Media Corporation
Robert R. Bennett
Managing Director
Hilltop Investments LLC
Brian M. Deevy
Media & Entertainment Group
RBC Capital Markets
M. Ian G. Gilchrist
Retired Investment Banker
Gregory B. Maffei
President and Chief Executive Officer
Liberty Media Corporation
Evan D. Malone, Ph.D.
President
NextFab Studio, LLC
David E. Rapley
Retired President and
Chief Executive Officer
Rapley Consulting, Inc.
Larry E. Romrell
Retired Executive Vice President
Tele-Communications, Inc.
Andrea L. Wong
Former President, International
Production
Sony Pictures Television
Former President, International
Sony Pictures Entertainment
Robert R. Bennett
Gregory B. Maffei
John C. Malone
COMPENSATION
COMMITTEE
M. Ian G. Gilchrist (Chairman)
David E. Rapley
Andrea L. Wong
EXECUTIVE COMMITTEE
Brian M. Deevy (Chairman)
M. Ian G. Gilchrist
Larry E. Romrell
NOMINATING
& CORPORATE
GOVRNANCE COMMITTEE
SENIOR OFFICERS
M. Ian G. Gilchrist
Larry E. Romrell
Andrea L. Wong
John C. Malone
Chairman of the Board
Gregory B. Maffei
Richard N. Baer
Chief Legal Officer
Mark D. Carleton
Chief Financial Officer
Albert E. Rosenthaler
President and Chief Executive Officer
CORPORATE SECRETARY
Pamela L. Coe
CORPORATE
HEADQUARTERS
12300 Liberty Boulevard
Englewood, CO 80112
(720) 875-5400
STOCK INFORMATION
Stock (BATRA/K), Series A and C
Liberty Formula One Common Stock
(FWONA/K), and Series A, B and
C Liberty SiriusXM Common Stock
(LSXMA/B/K) trade on the NASDAQ
Global Select Market.
CUSIP NUMBERS
BATRA – 531229 706
BATRB – 531229 805
BATRK – 531229 888
FWONA – 531229 870
FWONB – 531229 862
FWONK – 531229 854
LSXMA – 531229 409
LSXMB – 531229 508
LSXMK – 531229 607
TRANSFER AGENT
Liberty Media Corporation
Shareholder Services
c/o Computershare
P.O. Box 505000
Louisville, KY 40233-5000
Phone: (781) 575-2879
Toll free: (866) 367-6355
www.computershare.com
(TDD) (800) 952-9245
INVESTOR RELATIONS
Courtnee Chun
investor@libertymedia.com
(877) 772-1518
ON THE INTERNET
Visit the Liberty Media Corporation
website at www.libertymedia.com.
Liberty Media Corporation financial
statements are filed with the Securities
and Exchange Commission. Copies of
these financial statements can be obtained
from the Transfer Agent or through the
Liberty Media Corporation website.
ANNUAL REPORT 2017
Series A and C Liberty Braves Common
FINANCIAL STATEMENTS
Chief Corporate Development Officer
Telecommunication Device for the Deaf
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TABLE OF CONTENTS
LETTER TO SHAREHOLDERS ����������������������������������������������������������� 1-3
STOCK PERFORMANCE ���������������������������������������������������������������������� 4-8
INVESTMENT SUMMARY ��������������������������������������������������������������������9-10
FINANCIAL INFORMATION ��������������������������������������������������������������� F-1
CORPORATE DATA �������������������������������������������������������� Inside Back Cover
Certain statements in this Annual Report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding anticipated business plans, events, and opportunities; our business, product and marketing strategies; projected
benefits of tax reform; expected share repurchases; revenue growth and subscriber trends at Sirius XM Holdings Inc. (“SIRIUS XM”); new service
offerings; the recoverability of our goodwill and other long-lived assets; the performance of our equity affiliates; our projected sources and uses of
cash; SIRIUS XM’s stock repurchase program; the anticipated non-material impact of certain contingent liabilities related to legal and tax proceedings;
the expected benefits of the acquisition of Formula 1; and the future financial performance of Formula 1’s business and other matters arising in the
ordinary course of business. In particular, statements in our “Letter to Shareholders” and under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk” contain forward looking statements. Where,
in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good
faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished.
The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:
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consumer demand for our products and services and our ability
to adapt to changes in demand;
competitor responses to our businesses’ products and services;
uncertainties inherent in the development and integration of new
business lines and business strategies;
uncertainties associated with product and service development
and market acceptance, including the development and provision
of programming for satellite radio and telecommunications
technologies;
our businesses’ significant dependence upon automakers;
our businesses’ ability to attract and retain subscribers in the
future is uncertain;
our future financial performance, including availability, terms and
deployment of capital;
our ability to successfully integrate and recognize anticipated
efficiencies and benefits from the businesses we acquire;
the ability of suppliers and vendors to deliver products,
equipment, software and services;
interruption or failure of our information technology and
communication systems, including the failure of SIRIUS XM’s
satellites, could negatively impact our results and brand;
royalties for music rights have increased and may continue to do
so in the future;
the outcome of any pending or threatened litigation or
investigation;
availability of qualified personnel;
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changes in, or failure or inability to comply with, government
regulations, including, without limitation, regulations of the
Federal Communications Commission and consumer protection
laws, and adverse outcomes from regulatory proceedings;
changes in the nature of key strategic relationships with partners,
vendors and joint venturers;
general economic and business conditions and industry trends
including the current economic downturn;
consumer spending levels, including the availability and amount
of individual consumer debt;
rapid technological changes;
impairments of third-party intellectual property rights;
our indebtedness could adversely affect operations and could limit
the ability of our subsidiaries to react to changes in the economy
or our industry;
failure to protect the security of personal information about our
businesses’ customers, subjecting our businesses to potentially
costly government enforcement actions or private litigation and
reputational damage;
capital spending for the acquisition and/or development of
telecommunications networks and services;
the impact of AT&T Inc.’s agreement to acquire Time Warner Inc.
on our 2.25% Exchangeable Senior Debentures due 2046;
the regulatory and competitive environment of the industries in
which we, and the entities in which we have interests, operate;
and
threatened terrorist attacks, political unrest in international
markets and ongoing military action around the world.
These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Annual Report, and we expressly
disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any
change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.
When considering such forward-looking statements, you should keep in mind any risk factors identified and other cautionary statements contained
in this Annual Report and in our publicly filed documents, including our most recent Forms 10-K and 10-Q. Such risk factors and statements describe
circumstances which could cause actual results to differ materially from those contained in any forward-looking statement.
This Annual Report includes information concerning public companies in which we have controlling and non-controlling interests that file reports
and other information with the SEC in accordance with the Securities Exchange Act of 1934, as amended. Information contained in this Annual
Report concerning those companies has been derived from the reports and other information filed by them with the SEC. If you would like further
information about these companies, the reports and other information they file with the SEC can be accessed on the Internet website maintained by
the SEC at www.sec.gov. Those reports and other information are not incorporated by reference in this Annual Report.
ANNUAL REPORT 2017 LETTER TO SHAREHOLDERS
Dear Fellow Shareholders,
By Liberty standards, 2017 was a “quiet year” (it’s rare to write
two sequential shareholder letters with no change to the tickers
referenced), but it was a year of great accomplishment. The
primary businesses attributed to each of our trackers – Liberty
SiriusXM Group, Formula One Group and Braves Group – were
laser focused on operations, and we were very pleased with
performance across the board.
At our Investor Day in November, we emphasized the power
of “live” running throughout the Liberty Media portfolio.
A snapshot of 2017: 20 F1 Grands Prix, 29k Live Nation
concerts, 81 Braves homes games, 501 SiriusXM special events
plus a portfolio of live talk, news and sports content. In a
media landscape cluttered with distractions, consumers are
increasingly spending more of their time and wallet with live
experiences. We think the power of live is real, and we will
continue to explore new opportunities to expand and
strengthen our portfolio.
Liberty SiriusXM Group
SiriusXM had a stellar year – both operationally and
strategically. Their financial performance continued to impress.
Total subscriber count grew to 32.7 million as of year-end,
leveraging longstanding OEM relationships to drive new car
activations while growing their presence in the used car market.
Used car penetration reached 35% in 2017, with SiriusXM
representation at over 30,000 US auto dealers.
In addition to superb execution, 2017 was a year of
strategic actions:
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$480 million investment in Pandora enables SiriusXM to
test their participation in the ad-supported radio market
with relatively low risk
Acquisition of Automatic Labs, while small compared
to the core business, is representative of the gaining
momentum of SiriusXM’s connected vehicle initiatives
Recapitalization of SiriusXM Canada provided SiriusXM
with a 70% economic interest / 33% voting interest and
creates opportunity to leverage operational efficiencies
Perhaps most exciting of all, 360L made its long awaited debut
in the all-new Ram 1500 in January 2018, and the hype was well
warranted. 360L combines SiriusXM’s near-ubiquitous satellite
coverage with the benefits of two-way wireless connectivity in a
sharp and high-tech interface. We look forward to its continued
deployment over the next five years.
With recent launches on Sonos, Alexa and Apple TV, SiriusXM
continues to position itself well for ease of use outside of the
car. The redesigned app is expected to launch later this quarter,
and who knows what Howard has in store once his video is
incorporated onto the platform...
In summary, through execution and investment, the future at
SiriusXM is bright under Jim Meyer and his team’s excellent
management. Tax reform is an added positive that we expect
will materially improve SiriusXM’s free cash flow over the
next several years.
The discount at Liberty SiriusXM relative to the underlying
SIRI stock persisted in 2017 and widened in early 2018.
We took action by raising $400 million in exchangeable
notes in March 2018 and anticipate using these funds for
share repurchases.
Earlier in 2018, we also bought an attractive economic
position in iHeart Communications through purchases of
approximately $660 million face value of their senior debt.
We are in discussions with the creditors regarding a potential
equity investment in a restructured radio business. iHeart is
the nation’s largest radio network. The resiliency of the radio
market is often underappreciated, with over 90% domestic reach
that has remained virtually unchanged while other ad supported
media have seen consistent declines.
Formula One Group
When we bought Formula 1 (“F1”) in January 2017, we knew
there would be investment and time required to elevate the
business to its full potential. F1 was a multi-billion dollar brand
with very limited corporate infrastructure.
The first step was to build a team behind Chase Carey, Sean
Bratches and Ross Brawn. Headcount at F1’s new corporate and
commercial headquarters in Central London is currently around
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ANNUAL REPORT 2017 LETTER TO SHAREHOLDERS, CONTINUED
120 and is expected to reach 150 by mid-2018. We now have
teams for sponsorship, research, strategy, digital, marketing and
more – many of which previously didn’t exist.
A number of important structural steps were taken in 2017.
We optimized F1’s capital structure by fully repaying their
expensive second lien term loan, reducing the balance on the
first lien term loan and increasing their revolver size. The net
effect of these changes will reduce pro forma annual interest
expense by approximately $115 million, almost all of which will
fall to free cash flow. We also facilitated an orderly liquidation
for the selling shareholders of F1, removing a potential
overhang on FWONK stock.
At our Investor Day in November, Chase laid out four
operational pillars to drive long-term success for the business.
While it’s still early stages, we can already see strong progress
being made.
1) Maximize traditional revenue pillars
The team successfully negotiated key broadcast renewals in
Australia, France, Germany, US, Spain, Latin America and Italy
in 2017. Where possible, we retained important digital rights
to help grow additional exposure. Each agreement is different,
and the team carefully managed the balance between reach and
economics unique to each market.
On promotion, the list of global parties interested in hosting
races continues to grow. Our priority remains finding the right
partners who will help promote our long-term vision for the
sport. At the same time, we are working with existing partners
to make the events bigger, broaden the experience and
ultimately improve fan engagement to increase the value
of the events.
Sponsorship and advertising is still an underexploited area, but
the necessary relationship building for long-term partners takes
time. We continue to engage sponsors – both new and existing
– in more multi-dimensional ways. The opportunity here is
substantial.
2) Build and expand franchise revenue opportunities
The team is quickly capitalizing on extensions of the F1
franchise – leveraging new media distribution formats and a
fresh approach to fan engagement. Our inaugural F1 Live event
in London drew an estimated crowd of 100,000 to Trafalgar
Square, earning it the honor of ‘Sports Event of the Year’ at
the Drum UK Event Awards in 2017. We have four F1 Live
events planned for 2018. Hospitality, merchandising, licensing
and digital opportunities are abundant, and we announced the
launch of the F1 OTT streaming service earlier this year.
3) Build opportunity in new markets
Western Europe remains the foundation of F1, but various
under-penetrated markets provide significant white space for
a sport with proven global appeal. The US and China are two
obvious examples. We continue to evaluate the best expansion
points in these markets.
4) Transform the business model
As Chase says, the goal at F1 is to make 1 + 1 = 3. This involves
changing the culture of the sport to one that is collaborative and
partnership-oriented across teams, commercial partners and the
FIA. The joint announcement of the new power unit with the
FIA is one example of this new approach. The new power unit
will increase engine noise (a consistent request from our core
fan base), reduce cost for teams and improve competitiveness
across the grid.
2017 was just the beginning. Audience figures increased across
both TV and digital platforms, and 352 million unique viewers
tuned in over the season, marking the first increase since 2010.
F1 was the fastest growing sports brand on social media
platforms. On the track, we had five different drivers stand atop
the podium in 1st place last season – the most diversity in a
single season since 2013.
Overall, the opportunities are plentiful, but the process will take
time. We are focused on building F1 for long-term success. With
21 races in 2018, we look forward to an exciting season ahead.
When it comes to the power of live, no one demonstrates this
better than Live Nation – the other large asset attributed to
the Formula One Group. Michael Rapino and his team have
built unmatched global scale in all three of their businesses
– concerts, sponsorship and ticketing. Their proven concert
flywheel strategy produced yet another year of record results in
2017. Every 18 minutes, there is a Live Nation concert taking
place somewhere around in the world. Yet, Live Nation only
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ANNUAL REPORT 2017 LETTER TO SHAREHOLDERS, CONTINUED
represents 25% of revenue in the global concerts market. The
addressable market here is large, and they are actively going
after it.
Braves Group
SunTrust Park and the Battery Atlanta were huge successes in
their inaugural year, demonstrating an entirely new business
model for professional sports franchises. Through a diversified
real estate portfolio surrounding the ballpark, the Braves created
a new, stable stream of cash flows that differentiates us from
other sports franchises. Fans are piling into the Battery on game
days and non-game days alike. Corporate partners are now able
to promote their brands to customers 365 days a year. This new
model is a showcase for others. Nearly 100 sports franchises
and organizations from professional leagues globally have
visited the property to learn about the project.
A quick snapshot of the 2017 season metrics highlights the
success of SunTrust Park:
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Per game average attendance +23%
Revenue from ticket sales +76%
Concession sales +31%
Retail sales +45%
Corporate partner revenue +89% (highest in team history)
The new development isn’t only a home run for the Braves, it
is a win for the local community as well. Since the project was
first announced in 2014, more than $2 billion of commercial
development has been generated and more than 10,000 new
residents have moved to the Cumberland district, where the
development resides. There are still 19 acres of Braves-owned
land left to be developed in a phase two, and the Braves are
pursuing the best alternatives for this additional land.
Looking Ahead
We frequently get asked about the “end game” for the Liberty
Media structure. While it’s ever evolving, we thought it
worthwhile to revisit our philosophy toward trackers. As you
well know, tracking stocks have a deep history in the Liberty
family, providing value by (i) offering greater investor choice
(ii) leveraging management capabilities (iii) facilitating
capital structure flexibility (iv) allowing for tax consolidation
(v) providing greater access to capital markets and (vi) creating
tailored equities for strategic opportunities and management
compensation. All of these benefits have been realized by the
Liberty Media trackers; however, the tracking stock has often
been a transitional device. If history is any indication, structural
discounts tend to present a source of opportunity, and we have
not been idle in capitalizing on them. We have no immediate
plans to change the structure, but we are constantly weighing
our alternatives. Nothing is forever at Liberty, but one element
that remains consistent is our relentless focus on creating
long-term, sustainable shareholder value.
We look forward to seeing many of you at this year’s annual
investor meeting, which will take place on Wednesday,
November 14th at the TimesCenter at 242 West 41st Street
in New York City.
We appreciate your ongoing support.
Very truly yours,
Gregory B. Maffei
President & Chief Executive Officer
John C. Malone
Chairman of the Board
3
ANNUAL REPORT 2017 STOCK PERFORMANCE
The following graph compares the percentage change in the
cumulative total stockholder return on the former Series A and
Series B Liberty Capital group tracking stock (and its successor
issuances) from December 31, 2012 through December 31, 2017,
in comparison to the S&P 500 Media Index and the S&P 500
Index. On April 15, 2016 our former Series A and Series B
common stock was recapitalized into common stock of three
tracking stock groups: the Liberty SiriusXM Group (Nasdaq:
LSXMA, LSXMB), the Formula One Group (Nasdaq: FWONA)
(formerly known as the Liberty Media Group (Nasdaq: LMCA))
and the Braves Group (Nasdaq: BATRA). This chart includes the
impact of (i) the value of Starz, which was separated from our
company on January 11, 2013, assuming a sale of the resulting
Starz shares on the one-year anniversary of the spin-off and
reinvestment of the proceeds in our common stock, (ii) the
distribution of our former Series C shares in July 2014, (iii) the
spin-off of Liberty Broadband Corporation on November 4,
2014, assuming a sale of the resulting Liberty Broadband shares
on the one-year anniversary of the spin-off and reinvestment of
the proceeds in our common stock, (iv) the Liberty Broadband
rights offering, assuming the value of the Liberty Broadband
rights on the one-year anniversary of the spin-off was reinvested
in our common stock, (v) the aforementioned recapitalization of
Liberty Media’s common stock into three tracking stock groups
and (vi) the Braves Group rights offering.
Liberty Media Common Stock Composite vs.
S&P 500 Media and S&P 500 Indices 12/31/12 to 12/31/17
$300
$200
$100
$0
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Liberty Media Series A Composite
Liberty Media Series B Composite
S&P 500 Media Index
S&P 500 Index
12/31/2012
12/31/2013
12/31/2014
12/31/2015
12/31/2016
12/31/2017
Liberty Media Series A Composite
Liberty Media Series B Composite
S&P 500 Media Index
S&P 500 Index
$100.00
$100.00
$100.00
$100.00
$151.31
$151.70
$148.31
$129.60
$151.63
$152.60
$164.86
$144.36
$164.62
$162.29
$155.43
$143.31
$189.91
$191.15
$176.67
$156.98
$217.17
$222.54
$188.74
$187.47
Note: Trading data for all Series B shares is limited as they are thinly traded.
4
ANNUAL REPORT 2017 STOCK PERFORMANCE
The following graph compares the percentage change in the
cumulative total stockholder return on our former Series C
common stock (and its successor issuances) from July 24,
2014 (the date on which the former Series C common stock
first traded “regular way”) through December 31, 2017, in
comparison to the S&P 500 Media Index and the S&P 500
Index. On April 15, 2016 our former Series C common stock
was recapitalized into common stock of three tracking stock
groups: the Liberty SiriusXM Group (Nasdaq: LSXMK), the
Formula One Group (Nasdaq: FWONK) (formerly known as
the Liberty Media Group (Nasdaq: LMCK)) and the Braves
Group (Nasdaq: BATRK). This chart includes (i) the impact of
the spin-off of Liberty Broadband Corporation on November 4,
2014, assuming a sale of the resulting Liberty Broadband shares
on the one-year anniversary of the spin-off and reinvestment of
the proceeds in our common stock, (ii) the Liberty Broadband
rights offering, assuming the value of the Liberty Broadband
rights on the one-year anniversary of the spin-off was reinvested
in our common stock, (iii) the aforementioned recapitalization of
Liberty Media’s common stock into three tracking stock groups
and (iv) the Braves Group rights offering.
Liberty Media Series C Common Stock Composite vs.
S&P 500 Media and S&P 500 Indices 7/24/14 to 12/31/17
$150
$135
$120
$105
$90
July-14
Dec-14
Dec-15
Dec-16
Dec-17
Liberty Media Series C Composite
S&P 500 Media Index
S&P 500 Index
7/24/2014
12/31/2014
12/31/2015
12/31/2016
12/31/2017
Liberty Media Series C Composite
S&P 500 Media Index
S&P 500 Index
$100.00
$100.00
$100.00
$101.46
$103.47
$103.57
$109.47
$97.55
$102.81
$126.30
$110.88
$112.62
$145.38
$118.46
$134.49
5
ANNUAL REPORT 2017 STOCK PERFORMANCE
The following graph compares the percentage change in
the cumulative total stockholder return on our Series A,
Series B and Series C Liberty SiriusXM common stock
(Nasdaq: LSXMA, LSXMB, LSXMK) from April 18, 2016
(the date on which these shares first traded “regular way”) through
December 31, 2017, in comparison to the S&P 500 Media Index
and the S&P 500 Index.
Liberty SiriusXM Common Stock vs. S&P 500 and S&P 500 Media Indices
4/18/16 to 12/31/17
$150
$140
$130
$120
$110
$100
$90
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Series A Liberty SiriusXM
S&P 500 Index
Series B Liberty SiriusXM
S&P 500 Media Index
Series C Liberty SiriusXM
4/18/2016
12/31/2016
12/31/2017
Series A Liberty Sirius XM
Series B Liberty Sirius XM
Series C Liberty Sirius XM
S&P 500 Media Index
S&P 500 Index
$100.00
$100.00
$100.00
$100.00
$100.00
$110.64
$105.08
$112.95
$106.92
$106.90
$127.12
$133.83
$132.07
$114.22
$127.66
Note: Trading data for Series B shares is limited as they are thinly traded.
6
ANNUAL REPORT 2017 STOCK PERFORMANCE
The following graph compares the percentage change in the
cumulative total stockholder return on our Series A and Series
C Liberty Formula One common stock (Nasdaq: FWONA,
FWONK) (formerly known as the Liberty Media common
stock (Nasdaq: LMCA, LMCK)), from April 18, 2016 (the
date on which these shares first traded, “regular way”) through
December 31, 2017, in comparison to the S&P 500 Index and
the S&P 500 Media Index.
Liberty Formula One Common Stock vs. S&P 500 and S&P 500 Media Indices
4/18/16 to 12/31/17
$230
$210
$190
$170
$150
$130
$110
$90
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Series A Liberty Formula One
Series C Liberty Formula One
S&P 500 Index
S&P 500 Media Index
4/18/2016
12/31/2016
12/31/2017
Series A Liberty Formula One
Series C Liberty Formula One
S&P 500 Media Index
S&P 500 Index
$100.00
$100.00
$100.00
$100.00
$164.74
$172.62
$106.92
$106.90
$171.94
$188.21
$114.22
$127.66
7
ANNUAL REPORT 2017 STOCK PERFORMANCE
The following graph compares the percentage change in the
cumulative total stockholder return on our Series A and Series
C Liberty Braves common stock (Nasdaq: BATRA, BATRK),
including the impact of the Braves Group rights offering, from
April 18, 2016 (the date on which these shares first traded
“regular way”) through December 31, 2017, in comparison to the
S&P 500 Index and the S&P 500 Media Index.
Liberty Braves Common Stock vs. S&P 500 and S&P 500 Media Indices
4/18/16 to 12/31/17
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Series A Liberty Braves
Series C Liberty Braves
S&P 500 Index
S&P 500 Media Index
4/18/2016
12/31/2016
12/31/2017
Series A Liberty Braves
Series C Liberty Braves
S&P 500 Media Index
S&P 500 Index
$100.00
$100.00
$100.00
$100.00
$121.06
$126.70
$106.92
$106.90
$132.72
$139.22
$114.22
$127.66
$180
$160
$140
$120
$100
$80
$60
8
ANNUAL REPORT 2017 INVESTMENT SUMMARY
Based on publicly available information as of January 31, 2018 – libertymedia.com/overview/asset-list.html
Liberty Media Corporation owns interests in a broad range of
media, communications and entertainment businesses. Those
interests are attributed to three tracking stock groups: the Braves
Group, Formula One Group and Liberty SiriusXM Group.
The following tables set forth some of Liberty Media
Corporation’s assets that are held directly and indirectly through
partnerships, joint ventures, common stock investments and/
or instruments convertible into common stock. Ownership
percentages in the tables are approximate and, where
applicable, assume conversion to common stock by Liberty
Media Corporation and, to the extent known by Liberty Media
Corporation, other holders. In some cases, Liberty Media
Corporation’s interest may be subject to buy/sell procedures,
repurchase rights or dilution.
BRAVES GROUP
ENTITY
DESCRIPTION OF OPERATING BUSINESS
Braves Holdings, LLC
Owner of the Atlanta Braves, a Major League
Baseball club, as well as certain of the Atlanta
Braves minor league clubs and associated
real estate projects.
ATTRIBUTED
SHARE COUNT(1)
(in millions)
ATTRIBUTED
OWNERSHIP(2)
N/A
100%
LIBERTY SIRIUSXM GROUP
ENTITY
DESCRIPTION OF
OPERATING BUSINESS
Sirius XM Holdings Inc.
(NASDAQ: SIRI)
A satellite radio company delivering commercial-free
music plus sports, entertainment, comedy, talk,
news, traffic and weather.
ATTRIBUTED
SHARE COUNT(1)
(in millions)
ATTRIBUTED
OWNERSHIP(2)
3,162.2
70%
9
ANNUAL REPORT 2017 FORMULA ONE GROUP
ENTITY
DESCRIPTION OF OPERATING BUSINESS
Associated
Partners, L.P.
Investment and operating partnership that targets long-term,
risk-balanced and tax-efficient returns.
Braves Group(3)
Drone Racing
League, Inc.
Formula 1
Ideiasnet
(BOVESPA:
IDNT3)
INRIX, Inc.
Consists of Liberty Media Corporation’s wholly owned subsidiary
Braves Holdings, LLC, which owns the Atlanta Braves, a Major
League Baseball club, as well as certain of the Atlanta Braves’
minor league clubs and associated real estate projects.
DRL is the premier drone racing league. A sports and media
company, DRL combines world-class pilots, iconic locations, and
proprietary technology to create engaging drone racing content
with mass appeal.
Formula 1, which began in 1950, is an iconic global
motorsports business.
A Brazil-based company that develops projects and acquires stakes
in companies in technology, media and telecommunications.
Provider of traffic data and analytics to auto OEM’s,
governments, businesses and consumers.
Kroenke Arena
Company, LLC
Owner of the Pepsi Center, a sports and entertainment
facility in Denver, Colorado.
Liberty Israel
Venture Fund, LLC
Investment fund focused on Israeli technology companies.
Live Nation
Entertainment, Inc.
(NYSE: LYV)
Largest live entertainment company in the world, consisting
of three segments: concert promotion and venue operations,
sponsorship and advertising, and ticketing.
Saavn Global
Holdings, Ltd.
Tastemade, Inc.
Viacom Inc.
(NASDAQ: VIA)
Indian music streaming service focused on Bollywood music.
Tastemade brings the world’s leading tastemakers in food
together to create high-quality shows in the food and lifestyle
category for digital platforms.
Global entertainment content company that creates television
programs, motion pictures, short-form content, podcasts, games,
consumer products, live events, social media experiences and
other entertainment content. Brands include MTV®, Nickelodeon®,
Nick Jr.®, VH1®, BET®, Paramount Pictures®, TV Land®,
COMEDY CENTRAL®, CMT® and Paramount NetworkTM.
ATTRIBUTED
SHARE COUNT(1)
(in millions)
ATTRIBUTED
OWNERSHIP(2)
N/A
9.1(3)
N/A
N/A
4.0
N/A
N/A
N/A
69.6
N/A
N/A
33%
15% (3)
3%
100%
24%
4%
7%
80%
34%
6%
6%
1.9
<1%
1) Applicable only for publicly-traded entities.
2) Represents undiluted ownership interest unless otherwise noted.
3) Represents an inter-group interest in the Braves Group, which is not represented by outstanding shares.
10
ANNUAL REPORT 2017
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Liberty Media Corporation (“Liberty,” the “Company,” “we,” “us,” and “our”) has three classes of stock. During
November 2015, Liberty’s board of directors authorized management to pursue a recapitalization of the Company’s
common stock into three new tracking stock groups, one to be designated as the Liberty Braves common stock, one to be
designated as the Liberty Media common stock and one to be designated as the Liberty SiriusXM common stock (the
“Recapitalization”), and to cause to be distributed subscription rights related to the Liberty Braves common stock following
the creation of the new tracking stocks. The Recapitalization was completed on April 15, 2016 and the newly issued shares
commenced trading or quotation in the regular way on the Nasdaq Global Select Market or the OTC Markets, as applicable,
on Monday, April 18, 2016. In the Recapitalization, each issued and outstanding share of Liberty Media Corporation
common stock was reclassified and exchanged for (a) 1 share of the corresponding series of Liberty SiriusXM common
stock, (b) 0.1 of a share of the corresponding series of Liberty Braves common stock and (c) 0.25 of a share of the
corresponding series of Liberty Media common stock on April 15, 2016. Cash was paid in lieu of the issuance of any
fractional shares.
Following the creation of the tracking stocks, Series A, Series B and Series C Liberty SiriusXM common stock
trade under the symbols LSXMA/B/K, respectively; Series A, Series B and Series C Liberty Braves common stock trade
or are quoted under the symbols BATRA/B/K respectively; and Series A, Series B and Series C Liberty Media common
stock traded or were quoted under the symbols LMCA/B/K, respectively. Shortly following the closing of the acquisition
of Formula 1 on January 23, 2017 (the “Second Closing”), the Liberty Media Group and Liberty Media common stock
were renamed the Liberty Formula One Group (the “Formula One Group”) and the Liberty Formula One common stock,
respectively, and the corresponding ticker symbols for the Series A, Series B and Series C Liberty Media common stock
were changed to FWONA/B/K, respectively. Each series (Series A, Series B and Series C) of the Liberty SiriusXM
common stock trades on the Nasdaq Global Select Market. Series A and Series C Liberty Braves common stock trade on
the Nasdaq Global Select Stock Market, and Series B Liberty Braves common stock is quoted on the OTC Markets.
Series A and Series C Liberty Formula One common stock continue to trade on the Nasdaq Global Select Market and the
Series B Liberty Formula One common stock continues to be quoted on the OTC Markets. Although the Second Closing,
and the corresponding tracking stock name and the ticker symbol change, were not completed until January 23 and
January 24, 2017, respectively, historical information of the Liberty Media Group and Liberty Media common stock is
referred to herein as the Formula One Group and Liberty Formula One common stock, respectively.
The following tables set forth the range of high and low sales prices of shares of our common stock for the years
ended December 31, 2017 and 2016. Series B Liberty Braves common stock and Series B Liberty Formula One common
stock are each quoted on OTC Markets, and such over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
Series A (LMCA)
Low
High
Liberty Media Corporation
Series B (LMCB)
Low
High
Series C (LMCK)
High
Low
2016
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38.97 31.18 43.59 33.78 38.14 31.06
Second quarter (April 1 - April 15) (1) . . . . . . . . . . . . . . . . . . . . $ 39.31 37.76 43.74 39.00 38.45 37.02
F-1
Liberty SiriusXM Group
Series A (LSXMA) Series B (LSXMB) Series C (LSXMK)
Low
Low High
Low
High
High
2016
Second quarter (April 18 - June 30) (1) . . . . . . . . . . . . . . . . . . . . $ 34.00 28.00 36.97 28.60 35.69 28.04
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36.01 30.97 36.82 31.80 35.50 30.51
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36.88 31.83 38.76 32.63 36.36 31.34
2017
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40.18 34.04 41.20 33.82 39.80 33.62
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43.32 36.33 43.30 37.72 43.25 36.11
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46.43 40.78 46.18 41.53 46.24 40.49
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44.33 38.73 46.51 39.69 44.17 38.52
Braves Group
Series A (BATRA)
High
Low
Series B (BATRB) Series C (BATRK)
Low
Low
High
High
2016
Second quarter (April 18 - June 30) (1) . . . . . . . . . . . . . . . . . . . . $ 36.00 14.23 16.20 15.22 27.00 13.51
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17.67 14.97 17.75 14.50 17.47 14.42
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21.14 16.52 18.00 16.59 21.24 16.18
2017
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24.20 19.30 21.00 21.00 23.91 19.30
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25.64 22.78 25.80 23.92 25.38 22.66
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26.52 22.88 27.64 25.10 26.20 22.94
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26.32 21.35 27.54 22.40 26.20 21.53
Formula One Group
Series A (FWONA) Series B (FWONB) Series C (FWONK)
High
Low High
Low
High
Low
2016
Second quarter (April 18 - June 30) (1) . . . . . . . . . . . . . . . . . . . . $ 27.43 17.72 19.50 16.51 28.07 17.47
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30.11 18.84 29.03 18.00 29.65 18.62
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33.28 26.95 33.32 26.75 33.15 26.44
2017
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33.63 27.63 32.81 28.25 35.20 27.55
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35.59 29.84 35.26 30.60 37.18 30.73
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38.60 31.94 37.68 30.00 39.68 32.99
33.11
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39.37 31.58 38.77 33.26 41.14
(1) As discussed above and in the accompanying consolidated financial statements, the Recapitalization of the Company’s
stock into tracking stock groups was completed on April 15, 2016 and the newly issued shares commenced trading or
quotation in the regular way on the Nasdaq Global Select Market or the OTC Markets, as applicable, on Monday,
April 18, 2016.
F-2
Holders
The number of record holders as of January 31, 2018 were as follows:
Liberty SiriusXM common stock . . . . . .
Liberty Braves common stock . . . . . . . .
Liberty Formula One common stock . . .
1,192
1,412
833
74
46
64
1,244
847
1,075
Series A
Series B
Series C
The foregoing numbers of record holders do not include the number of stockholders whose shares are held
nominally by banks, brokerage houses or other institutions, but include each such institution as one shareholder.
Dividends
We have not paid any cash dividends on our common stock, and we have no present intention of so doing. Payment
of cash dividends, if any, in the future will be determined by our board of directors in light of our earnings, financial
condition and other relevant considerations.
Securities Authorized for Issuance Under Equity Compensation Plans
Information required by this item is incorporated by reference to our definitive proxy statement for our 2018
Annual Meeting of Stockholders.
Purchases of Equity Securities by the Issuer
Share Repurchase Programs
On January 11, 2013 (ratified February 26, 2013) Liberty announced that its board of directors authorized
$450 million of repurchases of Liberty Media Corporation common stock from that day forward. Additionally, in
connection with the Broadband Spin-Off, an additional authorization of $300 million in Liberty share repurchases was
approved by the Liberty board of directors on October 9, 2014. In August 2015, our board of directors authorized an
additional $1 billion of Liberty Media Corporation common stock repurchases. The amount previously authorized for share
repurchases may be used to repurchase Series A and Series C of each of Liberty SiriusXM common stock, Liberty Braves
common stock and Liberty Formula One common stock.
There were no repurchases of Liberty SiriusXM common stock, Liberty Formula One common stock or Liberty
Braves common stock during the three months ended December 31, 2017. As of December 31, 2017, $1.3 billion was
available to be used for share repurchases of Series A and Series C of each of Liberty SiriusXM common stock, Liberty
Braves common stock and Liberty Formula One common stock under the Company’s share repurchase program.
During the three months ended December 31, 2017, no shares of Series A or Series C Liberty Formula One
common stock, Series A or Series C Liberty SiriusXM common stock, and Series A or Series C Liberty Braves common
stock were surrendered by certain of our officers and employees to pay withholding taxes and other deductions in
connection with the vesting of their restricted stock and restricted stock units.
F-3
Selected Financial Data.
The following tables present selected historical financial statement information relating to our financial condition
and results of operations for the past five years. Certain prior period amounts have been reclassified for comparability with
the current year presentation. The following data should be read in conjunction with the accompanying consolidated
financial statements.
December 31,
2017
2016
2015
2014
2013
amounts in millions
201
562
Summary Balance Sheet Data:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,029
Investments in available-for-sale securities and other cost
investments (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,114
Investment in affiliates, accounted for using the equity method
851 3,299
(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,750
24,018
Intangible assets not subject to amortization (1) . . . . . . . . . . . . . $ 28,057
1,200
Intangible assets subject to amortization, net (1) . . . . . . . . . . . . $ 6,131
Total assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,996 31,377 29,798 30,269 33,632
1,575
Current portion of deferred revenue . . . . . . . . . . . . . . . . . . . . . . . $ 1,941
5,561
Long-term debt, including current portion (1) . . . . . . . . . . . . . . . $ 13,954
Deferred tax liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,478
1,396
Stockholders' equity (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,943 11,756 10,933 11,398 14,081
8,778 9,801
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,631
1,641
5,845
1,507
1,797
6,881
1,667
1,877
8,018
2,025
24,018
1,072
24,018
1,097
24,018
1,166
681 1,088
816 1,324
1,309
5,960
7,198
1,117
1,115
533
F-4
Summary Statement of Operations Data:
Revenue (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest expense (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Share of earnings (loss) of affiliates, net . . . . . . . . . . . . . . . . . . . . . $
Realized and unrealized gains (losses) on financial instruments,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gains (losses) on transactions, net (2) . . . . . . . . . . . . . . . . . . . . . . . $
Net earnings (loss) attributable to the noncontrolling interests . . . $
Net earnings (loss) from continuing operations attributable to
Liberty Media Corporation stockholders (4)
Liberty Media Corporation common stock . . . . . . . . . . . . . . . . . . $
Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . .
$
Basic earnings (loss) from continuing operations attributable to
Liberty Media Corporation stockholders per common share
(4)(5):
Series A, B and C Liberty Media Corporation common stock . . $
Series A, B and C Liberty SiriusXM common stock . . . . . . . . . .
Series A, B and C Liberty Braves common stock . . . . . . . . . . . . .
Series A, B and C Liberty Formula One common stock . . . . . . .
Diluted earnings (loss) from continuing operations attributable to
Liberty Media Corporation stockholders per common share
(4)(5):
Years ended December 31,
2017
2016
2015
2014
2013
amounts in millions, except per share amounts
7,594
1,394
(591)
104
5,276
1,734
(362)
14
4,795
954
(328)
(40)
4,450
841
(255)
(113)
4,002
814
(132)
(32)
(88)
17
536
37
4
244
(140)
(4)
184
38
—
217
295
7,978
211
NA
1,124
(25)
255
1,354
377
297
(30)
36
680
64
NA
NA
NA
64
178
NA
NA
NA
178
8,780
NA
NA
NA
8,780
NA 1.13 0.19
3.35
(0.51)
1.23
0.89
(0.65)
0.43
NA
NA
NA
0.52 24.73
NA
NA
NA
NA
NA
NA
Series A, B and C Liberty Media Corporation common stock . . $
Series A, B and C Liberty SiriusXM common stock . . . . . . . . . .
Series A, B and C Liberty Braves common stock . . . . . . . . . . . . .
Series A, B and C Liberty Formula One common stock . . . . . . .
NA
3.31
(0.51)
1.21
1.12
0.88
(0.65)
0.42
0.19
NA
NA
NA
0.52
NA
NA
NA
24.46
NA
NA
NA
(1) On September 7, 2016 Liberty, through its indirect wholly owned subsidiary Liberty GR Cayman Acquisition
Company, entered into two definitive stock purchase agreements relating to the acquisition of Delta Topco Limited
(“Delta Topco”), the parent company of Formula 1, a global motorsports business, from a consortium of sellers led by
CVC Capital Partners (“CVC”). The transactions contemplated by the first purchase agreement were completed on
September 7, 2016 and provided for Liberty’s acquisition of slightly less than a 20% minority stake in Formula 1 on
an undiluted basis for $746 million, funded entirely in cash (which is equal to $821 million in consideration less a
$75 million holdback to be repaid by Liberty to selling stockholders upon completion of the acquisition). On
October 27, 2016, under the terms of the first purchase agreement, Liberty acquired an additional incremental equity
interest in Delta Topco, maintaining Liberty’s investment in Delta Topco on an undiluted basis and increasing slightly
to 19.1% on a fully diluted basis. Prior to the Second Closing, CVC continued to be the controlling shareholder of
Formula 1, and Liberty did not have any voting interests or board representation in Formula 1. As a result, we
concluded that we did not have significant influence over Formula 1, and therefore accounted for our investment in
Formula 1 as a cost investment until the completion of the Second Closing. The Second Closing was completed on
January 23, 2017, at which time we began consolidating Formula 1. See note 5 to the accompanying consolidated
financial statements for additional information related to the acquisition of Formula 1.
(2) Liberty recorded a gain of approximately $7.5 billion associated with application of purchase accounting based on the
difference between fair value and the carrying value of the ownership interest Liberty had in SIRIUS XM Radio, Inc.
(now known as Sirius XM Holdings Inc., “SIRIUS XM”) prior to the acquisition of the controlling interest in January
2013. The gain on the transaction was excluded from taxable income. Net gains and losses on transactions are included
in the Other, net line item in the accompanying consolidated financial statements for the years ended December 31,
2017, 2016 and 2015.
F-5
(3) As discussed in note 1 in the accompanying consolidated financial statements, on November 4, 2014, Liberty
completed the Broadband Spin-Off. At the time of the Broadband Spin-Off, Liberty Broadband was comprised of,
among other things, (i) Liberty’s former interest in Charter, (ii) Liberty’s former wholly-owned subsidiary Skyhook
Holding, Inc. (“Skyhook”), (iii) Liberty’s former minority equity investment in Time Warner Cable, Inc. (“Time
Warner Cable”), (iv) certain deferred tax liabilities, as well as liabilities related to Time Warner Cable call options and
(v) initial indebtedness, pursuant to margin loans entered into prior to the completion of the Broadband Spin-Off. The
Company’s former investments in and results of Charter and Time Warner Cable are no longer included in the results
of Liberty from the date of the completion of the Broadband Spin-Off forward. Based on the relative significance of
Skyhook to Liberty, the Company concluded that discontinued operations presentation of Skyhook was not necessary.
(4) During November 2015, Liberty’s board of directors authorized management to pursue a recapitalization of the
Company’s common stock into three new tracking stock groups, one to be designated as the Liberty Braves common
stock, one to be designated as the Liberty Media common stock and one to be designated as the Liberty SiriusXM
common stock, and to cause to be distributed subscription rights related to the Liberty Braves common stock following
the creation of the new tracking stocks. The Recapitalization was completed on April 15, 2016 and the newly issued
shares commenced trading or quotation in the regular way on the Nasdaq Global Select Market or the OTC Markets,
as applicable, on Monday, April 18, 2016. In the Recapitalization, each issued and outstanding share of Liberty’s
existing common stock was reclassified and exchanged for (a) 1 share of the corresponding series of Liberty SiriusXM
common stock, (b) 0.1 of a share of the corresponding series of Liberty Braves common stock and (c) 0.25 of a share
of the corresponding series of Liberty Media common stock on April 15, 2016. Cash was paid in lieu of the issuance
of any fractional shares.
Following the creation of the tracking stocks, Series A, Series B and Series C Liberty SiriusXM common stock trade
under the symbols LSXMA/B/K, respectively; Series A, Series B and Series C Liberty Braves common stock trade or
are quoted under the symbols BATRA/B/K respectively; and Series A, Series B and Series C Liberty Media common
stock traded or were quoted under the symbols LMCA/B/K, respectively. Shortly following the Second Closing, the
Liberty Media Group and Liberty Media common stock were renamed the Liberty Formula One Group (the “Formula
One Group”) and the Liberty Formula One common stock, respectively, and the corresponding ticker symbols for the
Series A, Series B and Series C Liberty Media common stock were changed to FWONA/B/K, respectively. Each series
(Series A, Series B and Series C) of the Liberty SiriusXM common stock trades on the Nasdaq Global Select Market.
Series A and Series C Liberty Braves common stock trade on the Nasdaq Global Select Stock Market, and Series B
Liberty Braves common stock is quoted on the OTC Markets. Series A and Series C Liberty Formula One common
stock continue to trade on the Nasdaq Global Select Market, and the Series B Liberty Formula One common stock
continues to be quoted on the OTC Markets.
(5) On July 23, 2014, holders of Series A and Series B Liberty Media Corporation common stock as of 5:00 p.m., New
York City, time on July 7, 2014, the record date for the dividend, received a dividend of two shares of Series C Liberty
Media Corporation common stock for each share of Series A or Series B Liberty Media Corporation common stock
held by them as of the record date. The impact on basic and diluted earnings per share of the Series C Liberty Media
Corporation common stock issuance has been reflected retroactively in all periods presented due to the treatment of
the dividend as a stock split for accounting purposes.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis provides information concerning our results of operations and financial
condition. This discussion should be read in conjunction with our accompanying consolidated financial statements and the
notes thereto. See note 3 in the accompanying consolidated financial statements for an overview of accounting standards
that we have adopted or that we plan to adopt that have had or may have an impact on our financial statements.
Overview
We own controlling and non-controlling interests in a broad range of media and entertainment companies. Our
most significant operating subsidiary, which is a reportable segment, is SIRIUS XM. SIRIUS XM provides a subscription
based satellite radio service. SIRIUS XM transmits its music, sports, entertainment, comedy, talk, news, traffic and weather
channels, as well as infotainment services, in the United States on a subscription fee basis through its two proprietary
satellite radio systems—the Sirius system and the XM system. Subscribers can also receive music and other channels, plus
F-6
features such as SiriusXM On Demand, over SIRIUS XM’s Internet radio service, including through applications for
mobile devices, home devices and other consumer electronic equipment. SIRIUS XM also provides connected vehicle
services, which are designed to enhance the safety, security and driving experience for vehicle operators while providing
marketing and operational benefits to automakers and their dealers.
On September 7, 2016, Liberty, through its indirect wholly owned subsidiary Liberty GR Cayman Acquisition
Company, entered into two definitive stock purchase agreements relating to the acquisition of Delta Topco, the parent
company of Formula 1. The transactions contemplated by the first purchase agreement were completed on September 7,
2016, resulting in the acquisition of slightly less than a 20% minority stake in Formula 1 on an undiluted basis. On
October 27, 2016 under the terms of the first purchase agreement, Liberty acquired an additional incremental equity interest
of Delta Topco, maintaining Liberty’s investment in Delta Topco on an undiluted basis and increasing slightly to 19.1%
on a fully diluted basis. Liberty acquired 100% of the fully diluted equity interests of Delta Topco, other than a nominal
number of shares held by certain Formula 1 teams, in a closing under the second purchase agreement (and following the
unwind of the first purchase agreement) on January 23, 2017. See note 5 to the accompanying consolidated financial
statements for additional information related to the acquisition. Liberty’s acquired interest in Delta Topco and by extension
Formula 1, along with existing Formula 1 cash and debt (which is non-recourse to Liberty), was attributed to the Formula
One Group upon completion of the Second Closing. Formula 1 is a reportable segment.
Our “Corporate and Other” category includes a consolidated subsidiary, Braves Holdings, LLC (“Braves
Holdings”) and corporate expenses. In addition, we hold an ownership interest in Live Nation Entertainment, Inc. (“Live
Nation”), which is accounted for as an equity method investment at December 31, 2017 and is included in corporate and
other. We also maintain minority positions in other public companies, such as Time Warner, Inc. (“Time Warner”), which
is accounted for at fair market value and is included in corporate and other.
As discussed in note 2 of the accompanying consolidated financial statements, on April 15, 2016, Liberty
completed the Recapitalization. Upon completion of the Second Closing, as discussed below, the Liberty Media Group
was renamed the Formula One Group. Although the Recapitalization was not effective for all periods presented herein,
information has been presented among the tracking stock groups for all periods presented as if the Recapitalization had
been completed for all periods presented. This attribution of historical financial information does not purport to be what
actual results and balances would have been if the Recapitalization had actually occurred and been in place during the
periods prior to April 15, 2016. Operating results prior to the Recapitalization are attributed to Liberty stockholders in the
aggregate.
A tracking stock is a type of common stock that the issuing company intends to reflect or “track” the economic
performance of a particular business or “group,” rather than the economic performance of the company as a whole. While
the Liberty SiriusXM Group, Liberty Braves Group (the “Braves Group”) and Formula One Group have separate
collections of businesses, assets and liabilities attributed to them, no group is a separate legal entity and therefore cannot
own assets, issue securities or enter into legally binding agreements. Therefore, the Liberty SiriusXM Group, Braves Group
and Formula One Group do not represent separate legal entities, but rather represent those businesses, assets and liabilities
that have been attributed to each respective group. Holders of tracking stock have no direct claim to the group’s stock or
assets and therefore, do not own, by virtue of their ownership of a Liberty tracking stock, any equity or voting interest in
a company, such as SIRIUS XM, Formula 1 or Live Nation, in which Liberty holds an interest and that is attributed to a
Liberty tracking stock group, such as the Liberty SiriusXM Group or the Formula One Group. Holders of tracking stock
are also not represented by separate boards of directors. Instead, holders of tracking stock are stockholders of the parent
corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation.
The term “Liberty SiriusXM Group” does not represent a separate legal entity, rather it represents those
businesses, assets and liabilities that have been attributed to that group. The Liberty SiriusXM Group is primarily
comprised of Liberty’s subsidiary, SIRIUS XM, corporate cash and a margin loan obligation incurred by a wholly-owned
special purpose subsidiary of Liberty. As of December 31, 2017, the Liberty SiriusXM Group has cash and cash equivalents
of approximately $615 million, which includes $69 million of subsidiary cash.
SIRIUS XM is the only operating subsidiary attributed to the Liberty SiriusXM Group. In the event SIRIUS XM
were to become insolvent or file for bankruptcy, Liberty’s management would evaluate the circumstances at such time and
F-7
take appropriate steps in the best interest of all of its stockholders, which may not be in the best interest of a particular
group or groups when considered independently. In such a situation, Liberty’s management and its board of directors would
have several approaches at their disposal, including, but not limited to, the conversion of the Liberty SiriusXM common
stock into another tracking stock of Liberty, the reattribution of assets and liabilities among Liberty’s tracking stock groups
or the restructuring of Liberty’s tracking stocks to either create a new tracking stock structure or eliminate it altogether.
The term “Braves Group” does not represent a separate legal entity, rather it represents those businesses, assets
and liabilities that have been attributed to that group. The Braves Group is primarily comprised of Braves Holdings, which
indirectly owns the Atlanta Braves Major League Baseball Club (“ANLBC,” the “Braves,” or the “Atlanta Braves”) and
certain assets and liabilities associated with ANLBC’s stadium and mixed use development project (the “Development
Project”) and corporate cash. Also upon the Recapitalization, Liberty had attributed to the Braves Group all liabilities
arising under a note from Braves Holdings to Liberty, with a total capacity of up to $165 million of borrowings by Braves
Holdings (the “Intergroup Note”) relating to funds to be borrowed and used for investment in the Development Project.
As discussed below, the Intergroup Note, including accrued interest, was repaid during June 2016 using proceeds from the
subscription rights offering and the Intergroup Note agreement was cancelled. As of December 31, 2017, the Braves Group
has cash and cash equivalents of approximately $132 million, which includes $55 million of subsidiary cash. Additionally,
as discussed below, the Formula One Group retains an intergroup interest in the Braves Group.
Following the Recapitalization, Liberty issued subscription rights to acquire shares of Series C Liberty Braves
common stock. In the rights distribution, Liberty distributed 0.47 of a Series C Liberty Braves subscription right for each
share of Series A, Series B or Series C Liberty Braves common stock held as of 5:00 p.m., New York City time, on May 16,
2016. Fractional Series C Liberty Braves subscription rights were rounded up to the nearest whole right. Each whole
Series C Liberty Braves subscription right entitled the holder to purchase, pursuant to the basic subscription privilege, one
share of Liberty’s Series C Liberty Braves common stock at a subscription price of $12.80, which was equal to an
approximate 20% discount to the trading day volume weighted average trading price of Liberty’s Series C Liberty Braves
common stock for the 18-day trading period ending on May 11, 2016. Each Series C Liberty Braves subscription right also
entitled the holder to subscribe for additional shares of Series C Liberty Braves common stock that were unsubscribed for
in the rights offering pursuant to an oversubscription privilege. The rights offering commenced on May 18, 2016, which
was also the ex-dividend date for the distribution of the Series C Liberty Braves subscription rights. The rights offering
expired at 5:00 p.m. New York City time, on June 16, 2016 and was fully subscribed with 15,833,634 shares of Series C
Liberty Braves common stock issued to those rightsholders exercising basic and, if applicable, oversubscription privileges.
Approximately $150 million of the proceeds from the rights offering were used to repay the outstanding balance on the
Intergroup Note and accrued interest to Liberty. The remaining proceeds will be used for future development costs
attributed to the Braves Group.
The term “Formula One Group” does not represent a separate legal entity, rather it represents those businesses,
assets and liabilities that have been attributed to that group. As of December 31, 2017, the Formula One Group (formerly
the Liberty Media Group) is primarily comprised of all of the businesses, assets and liabilities of Liberty other than those
specifically attributed to the Liberty SiriusXM Group or the Braves Group, including Liberty’s interests in Formula 1 and
Live Nation, a minority equity investment in Time Warner, the recovery received in connection with the Vivendi lawsuit
and cash, as well as Liberty’s 1.375% Cash Convertible Notes due 2023 and related financial instruments, Liberty’s 1%
Cash Convertible Notes due 2023 and Liberty’s 2.25% Exchangeable Senior Debentures due 2046. Following the creation
of the tracking stocks and the closing of the Series C Liberty Braves common stock rights offering, the Formula One Group
retains an intergroup interest in the Braves Group of approximately 15.1%, valued at $202 million, as of December 31,
2017. As of December 31, 2017, the Formula One Group had cash and cash equivalents of approximately $282 million,
which includes $165 million of subsidiary cash.
Strategies and Challenges of Business Units
SIRIUS XM. SIRIUS XM is focused on several initiatives to increase its revenue. SIRIUS XM regularly
evaluates its business plans and strategy. Currently, its strategies include:
•
the acquisition and pricing of unique or compelling programming;
F-8
•
•
•
•
the development and introduction of new features or services;
significant new or enhanced distribution arrangements;
investments in infrastructure, such as satellites, equipment or radio spectrum; and
acquisitions and investments, including acquisitions and investments that are not directly related to its
satellite radio business.
SIRIUS XM faces certain key challenges in its attempt to meet these goals, including:
•
•
•
•
•
•
•
its ability to convince owners and lessees of new and previously owned vehicles that include satellite radios
to purchase subscriptions to its service;
potential loss of subscribers due to economic conditions and competition from other entertainment providers;
competition for both listeners and advertisers, including providers of radio and other audio services;
the operational performance of its satellites;
the effectiveness of integration of acquired businesses and assets into its operations;
the performance of its manufacturers, programming providers, vendors, and retailers; and
unfavorable changes in legislation.
Formula 1. Formula 1’s goal is to further broaden and increase the global scale and appeal of the World
Championship in order to improve the overall value of Formula 1 as a sport and its financial performance. Key factors of
this strategy include:
•
•
•
•
continuing to seek and identify opportunities to expand and develop the Event calendar and bring Events to
attractive and/or strategically important new markets outside of Europe, which typically have higher race
promotion fees, while continuing to build on the foundation of the sport in Europe;
developing advertising and sponsorship revenue, including increasing sales of Event-based packages and
under the Global Partner program, and exploring opportunities in underexploited product categories;
capturing opportunities created by media’s evolution, including the growth of social media and the
development of Formula 1’s digital media assets; and
building up the entertainment experience for fans and engaging with new fans on a global basis to further
drive race attendance and television viewership.
Results of Operations—Consolidated
General. We provide in the tables below information regarding our Consolidated Operating Results and Other
Income and Expense, as well as information regarding the contribution to those items from our reportable segments. The
“corporate and other” category consists of those assets or businesses which do not qualify as a separate reportable segment.
For a more detailed discussion and analysis of the financial results of our principal reportable segment, see “Results of
Operations—Businesses” below.
F-9
Consolidated Operating Results
Revenue
Liberty SiriusXM Group
Years ended December 31,
2017
2016
2015
amounts in millions
SIRIUS XM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,425 5,014 4,552
4,552
Total Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . .
5,425
5,014
Braves Group
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
386
386
262
262
243
243
Formula One Group
Formula 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Consolidated Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,594 5,276 4,795
1,783
1,783
—
—
Operating Income (Loss)
Liberty SiriusXM Group
SIRIUS XM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,588 1,386 1,073
—
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,073
Total Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . .
(41)
1,547
(34)
1,352
Braves Group
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(113)
(113)
(61)
(61)
(38)
(38)
Formula One Group
Formula 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
(57)
(40)
—
443
443
Consolidated Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,394 1,734
—
(81)
(81)
954
Adjusted OIBDA
Liberty SiriusXM Group
SIRIUS XM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,109 1,853 1,660
—
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,660
Total Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . .
(15)
2,094
(15)
1,838
Braves Group
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
2
(20)
(20)
3
3
Formula One Group
Formula 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(35)
(35)
Consolidated Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,493 1,773 1,628
438
(41)
397
—
(45)
(45)
Revenue. Our consolidated revenue increased $2,318 million and $481 million for the years ended
December 31, 2017 and 2016, respectively, as compared to the corresponding prior year periods.
The 2017 increase was primarily driven by $1,783 million of Formula 1 revenue, as a result of the Company’s
acquisition of Formula 1 on January 23, 2017, and revenue growth at SIRIUS XM of $411 million. Additionally, Braves
Holdings revenue increased $124 million during the year ended December 31, 2017, as compared to the prior year.
F-10
The 2016 increase was primarily driven by revenue growth at SIRIUS XM of $462 million. Additionally, Braves
Holdings revenue increased $19 million during the year ended December 31, 2016, as compared to the prior year.
See “Results of Operations—Businesses” below for a more complete discussion of the results of operations of
SIRIUS XM, Formula 1 and Braves Holdings.
Operating income. Our consolidated operating income decreased $340 million and increased $780 million for
the years ended December 31, 2017 and 2016, respectively, as compared to the corresponding prior years. Formula One
Group operating income decreased $483 million during 2017 as compared to the prior year, largely due to the favorable
one-time net $511 million Vivendi lawsuit settlement during the first quarter of 2016, as discussed in note 17 of the
accompanying consolidated financial statements. Liberty SiriusXM Group operating income increased $195 million and
Braves Group operating loss increased $52 million during 2017 as compared to the prior year. Formula One Group
operating income improved $524 million during 2016 as compared to the prior year, largely due to the Vivendi lawsuit
settlement. In addition, Liberty SiriusXM Group operating income increased $279 million during 2016 as compared to the
prior year, partially offset by the Braves Group operating loss which increased $23 million during 2016 as compared to the
prior year. See “Results of Operations—Businesses” below for a more complete discussion of the results of operations of
SIRIUS XM, Formula 1 and Braves Holdings.
Stock-based compensation. Stock-based compensation includes compensation related to (1) options and stock
appreciation rights for shares of our common stock that are granted to certain of our officers and employees, (2) phantom
stock appreciation rights granted to officers and employees of certain of our subsidiaries pursuant to private equity plans
and (3) amortization of restricted stock grants.
We recorded $230 million, $150 million and $204 million of stock compensation expense for the years ended
December 31, 2017, 2016 and 2015, respectively. The increase in stock compensation expense in 2017 as compared to the
prior year is primarily due to increases of $37 million at Braves Holdings, $23 million at Formula 1 and $15 million at
SIRIUS XM.
Upon acquisition of a controlling interest in SIRIUS XM, we recorded an adjustment to increase SIRIUS XM’s
unvested stock-based compensation to fair value and amortized this adjustment through December 31, 2015. SIRIUS XM
stock-based compensation expense in 2015 included $73 million of this purchase price amortization expense. This caused
a decrease in 2016 stock-based compensation expense recognized by the Company, which was partially offset by a
$25 million increase in stock-based compensation expense recognized by SIRIUS XM during 2016 as compared to the
prior year.
As of December 31, 2017, the total unrecognized compensation cost related to unvested Liberty equity awards
was approximately $30 million. Such amount will be recognized in our consolidated statements of operations over a
weighted average period of approximately 1.7 years. As of December 31, 2017, the total unrecognized compensation cost
related to unvested SIRIUS XM stock options and restricted stock units was $242 million. The SIRIUS XM unrecognized
compensation cost will be recognized in the Company’s consolidated statements of operations over a weighted average
period of approximately 2.5 years.
See “Results of Operations—Businesses” below for a more complete discussion of the results of operations of
SIRIUS XM, Formula 1 and Braves Holdings.
Adjusted OIBDA. We define Adjusted OIBDA as revenue less operating expenses and selling, general and
administrative (“SG&A”) expenses (excluding stock compensation), separately reported litigation settlements and
restructuring and impairment charges. Our chief operating decision maker and management team use this measure of
performance in conjunction with other measures to evaluate our businesses and make decisions about allocating resources
among our businesses. We believe this is an important indicator of the operational strength and performance of our
businesses, including each business’s ability to service debt and fund capital expenditures. In addition, this measure allows
us to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies
to improve performance. This measure of performance excludes such costs as depreciation and amortization, stock-based
compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the
F-11
measurement of operating income pursuant to generally accepted accounting principles (“GAAP”). Accordingly, Adjusted
OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided
by operating activities and other measures of financial performance prepared in accordance with GAAP. See note 18 to the
accompanying consolidated financial statements for a reconciliation of Adjusted OIBDA to Operating income (loss) and
Earnings (loss) from continuing operations before income taxes.
During the fourth quarter of 2017 and 2016, SIRIUS XM recorded $45 million and $46 million, respectively,
related to music royalty legal settlements and reserves. As separately reported in note 17 of the accompanying consolidated
financial statements, the $45 million and $46 million of expenses are included in the Revenue share and royalties expense
line item in the accompanying consolidated financial statements for the years ended December 31, 2017 and 2016,
respectively, but have been excluded from Adjusted OIBDA for the corresponding periods as these expenses were not
incurred as a part of the Company’s normal operations for the periods, and these lump sum amounts do not relate to the
on-going performance of the business.
SIRIUS XM recognized approximately $43 million, $40 million and $127 million of Revenue share and royalties
within the consolidated statement of operations during the years ended December 31, 2017, 2016 and 2015, respectively,
related to the SIRIUS XM legal settlement associated with SIRIUS XM’s use of certain pre-1972 sound recordings. As
separately reported in note 17 of the accompanying consolidated financial statements, $108 million of the settlement
amount recognized during the year ended December 31, 2015 was excluded from Adjusted OIBDA for the corresponding
period, as this expense was not incurred as a part of SIRIUS XM’s normal operations for the period, and this lump sum
amount did not relate to the on-going performance of the business. Subsequent to the settlement during June 2015,
SIRIUS XM recognized $43 million, $40 million and $19 million in 2017, 2016 and 2015, respectively, that is included as
a component of Adjusted OIBDA.
Consolidated Adjusted OIBDA increased $720 million and $145 million for the years ended December 31, 2017
and 2016, respectively, as compared to the corresponding prior year periods.
The increase in Adjusted OIBDA in 2017 as compared to the prior year was due to increases in Formula One
Group Adjusted OIBDA of $442 million, Liberty SiriusXM Group Adjusted OIBDA of $256 million and Braves Group
Adjusted OIBDA of $22 million.
The increase in Adjusted OIBDA in 2016 as compared to the prior year was primarily due to an increase in the
Liberty SiriusXM Group Adjusted OIBDA of $178 million, partially offset by declines in Braves Group Adjusted OIBDA
of $23 million and Formula One Group Adjusted OIBDA of $10 million.
See “Results of Operations—Businesses” below for a more complete discussion of the results of operations of
SIRIUS XM, Formula 1 and Braves Holdings.
F-12
Other Income and Expense
Components of Other Income (Expense) are presented in the table below.
Interest expense
Years ended December 31,
2017 2016 2015
amounts in millions
Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (356)
(15)
Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(220)
Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(307)
(1)
(20)
Consolidated Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (591) (362) (328)
(342)
(1)
(19)
Share of earnings (losses) of affiliates
Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29
78
Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 104
13
9
(8)
14
(1)
9
(48)
(40)
Realized and unrealized gains (losses) on financial instruments, net
Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (16)
—
Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(72)
Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (88)
—
—
1
—
(140)
36
37 (140)
Other, net
Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (11)
3
Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
Consolidated Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(25)
—
21
(4)
—
—
12
12
$ (567) (315) (496)
Interest expense. Consolidated interest expense increased $229 million and $34 million for the years ended
December 31, 2017 and 2016 as compared to the corresponding prior year periods, respectively. The increase in 2017 as
compared to the prior year was primarily due to approximately $167 million of interest expense attributable to debt held
at Formula 1, which we began consolidating on January 23, 2017 when we acquired Formula 1. The remaining increase in
2017 was due to an increase in the average amount of corporate, SIRIUS XM and other subsidiary debt outstanding.
F-13
Share of earnings (losses) of affiliates. The following table presents our share of earnings (losses) of affiliates:
Years ended December 31,
2016 2015
2017
amounts in millions
Liberty SiriusXM Group
SIRIUS XM Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29
29
Total Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . .
13
13
(1)
(1)
Braves Group
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78
78
9
9
9
9
Formula One Group
Live Nation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(18)
15
(3)
$ 104
(12)
4
(8)
14
(27)
(21)
(48)
(40)
During the year ended December 31, 2017, an equity method affiliate of Braves Holdings sold a controlling
interest in a subsidiary, resulting in Braves Holdings recording its portion of the gain of $69 million.
The increase in our share of Live Nation’s earnings during 2016 was primarily due to an improvement in Live
Nation’s net income during 2016, primarily driven by an improvement in operating income and increased equity in earnings
of Live Nation’s nonconsolidated affiliates during the year. The improvement in Live Nation’s net income during 2016
was partially offset by a loss on extinguishment of its senior secured credit facility during 2016. Accordingly, the Company
relieved a portion of the underlying difference in the equity of Live Nation related to the debt extinguished during 2016.
Realized and unrealized gains (losses) on financial instruments. Realized and unrealized gains (losses) on
financial instruments are comprised of changes in the fair value of the following:
Fair Value Option Securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt measured at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of bond hedges . . . . . . . . . . . . . . . . . . . .
Other derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years ended December 31,
2017
2016
2015
amounts in millions
$
$
(36)
(126)
72
2
(88)
112
(113)
37
1
37
(151)
(5)
23
(7)
(140)
The losses on Fair Value Option Securities (as defined in note 3 of our accompanying consolidated financial
statements) during 2017 and 2015 are primarily due to general decreases in market valuation adjustments during the
respective years. The gain on Fair Value Option Securities during 2016 is primarily due to a general increase in market
valuation adjustments during the year.
Changes in unrealized gains (losses) on debt measured at fair value are due to market factors primarily driven by
changes in the fair value of the underlying shares into which the debt is exchangeable.
Liberty issued $1 billion of cash convertible notes in October 2013 which are accounted for at fair value, as
elected by Liberty at the time of issuance of the notes. At the same time, Liberty entered into a bond hedge transaction on
the same amount of underlying shares. These derivatives are marked to fair value on a recurring basis. The primary driver
of the change in the fair value of bond hedges in 2017 as compared to the prior year is the change in the fair value of the
underlying stock.
F-14
Other, net. The gain in 2017 was primarily due to a $19 million increase in interest and dividend income and a
$12 million increase in gains on transactions, partially offset by a $24 million increase in losses on early extinguishment
of debt, primarily related to the redemption of certain debt at SIRIUS XM. The loss in 2016 was primarily due to a
$24 million loss on extinguishment of SIRIUS XM’s redemption of its 5.875% Senior Notes due 2020 during the year,
partially offset by approximately $18 million in dividend and interest income, primarily due to dividends on Time Warner
shares. The gain in 2015 was primarily due to $17 million in dividend and interest income, primarily due to dividends on
Time Warner shares, partially offset by losses on disposals of property, plant and equipment.
Income taxes. Our effective tax rate for the years ended December 31, 2017, 2016 and 2015 was a benefit of
129% and expense of 35% and 46%, respectively. Our effective tax rate for all three years was impacted for the following
reasons:
• During 2017, in connection with the initial analysis of the impact of the Tax Cuts and Jobs Act (the “Tax
Act”), as discussed in note 11 of the accompanying consolidated financial statements, the Company recorded
a discrete net tax benefit, primarily driven by the corporate tax rate reduction.
• During 2016, our effective tax rate was equal to the federal tax rate of 35% due to the offsetting impact of
state income taxes and federal tax credits claimed by SIRIUS XM.
• During 2015, our effective tax rate was higher than the federal tax rate of 35% primarily due to the effect of
a tax law change in the District of Columbia (“D.C.”) during the first quarter of 2015 which reduces the
future allocation of SIRIUS XM’s taxable income in D.C. As a result, SIRIUS XM expects it will reduce its
future taxes and use less of certain net operating losses in the future.
Net earnings. We had net earnings of $1,890 million, $924 million and $248 million for the years ended
December 31, 2017, 2016 and 2015, respectively. The change in net earnings was the result of the above-described
fluctuations in our revenue, expenses and other gains and losses.
Liquidity and Capital Resources
As of December 31, 2017, substantially all of our cash and cash equivalents are invested in U.S. Treasury
securities, other government securities or government guaranteed funds, AAA rated money market funds and other highly
rated financial and corporate debt instruments.
The following are potential sources of liquidity: available cash balances, cash generated by the operating activities
of our privately-owned subsidiaries (to the extent such cash exceeds the working capital needs of the subsidiaries and is
not otherwise restricted), proceeds from net asset sales, monetization of our public investment portfolio, debt and equity
issuances, available borrowing capacity under margin loans, and dividend and interest receipts.
Liberty currently does not have a corporate debt rating subsequent to the Split-Off and the Starz Spin-Off (each
as defined in note 1 of the accompanying consolidated financial statements).
F-15
As of December 31, 2017, Liberty’s liquidity position consisted of the following:
Cash and Cash
Equivalents
Unencumbered
Fair Value Option
AFS Securities
amounts in millions
Liberty SiriusXM Group
SIRIUS XM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liberty SiriusXM Group . . . . . . . . . . . . . .
$
Braves Group
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . . . . . . . . . . . . . .
Formula One Group
Formula 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . . . . . . . . . . . . . .
69
546
615
132
132
165
117
282
—
—
—
—
—
—
368
368
To the extent the Company recognizes any taxable gains from the sale of assets we may incur tax expense and be
required to make tax payments, thereby reducing any cash proceeds. Additionally, the Company has a controlling interest
in SIRIUS XM which has significant cash flows provided by operating activities, although due to SIRIUS XM being a
separate public company and the significant noncontrolling interest, we do not have ready access to its cash. Cash held by
Formula 1 is accessible by Liberty, except when certain restricted payment tests imposed by the Senior Loan Facility at
Formula 1 are not met. As of December 31, 2017, Liberty had fully drawn on the line of credit portion of the $750 million
margin loan due 2018 and had $150 million available under the Live Nation Margin Loan. Certain tax consequences may
reduce the net amount of cash that Liberty is able to utilize for corporate purposes. Liberty believes that it currently has
appropriate legal structures in place to repatriate foreign cash as tax efficiently as possible and meet the business needs of
the Company.
The cash provided (used) by our continuing operations for the prior three years is as follows:
Years ended December 31,
2017
2016
2015
Cash Flow Information
Liberty SiriusXM Group cash provided (used) by operating activities. . . . . . . $ 1,849
(42)
Braves Group cash provided (used) by operating activities . . . . . . . . . . . . . . . .
(75)
Formula One Group cash provided (used) by operating activities . . . . . . . . . .
amounts in millions
1,704
89
378
Net cash provided (used) by operating activities . . . . . . . . . . . . . . . . . . . . . . . $ 1,732 2,171
Liberty SiriusXM Group cash provided (used) by investing activities . . . . . . . $ (1,254)
Braves Group cash provided (used) by investing activities . . . . . . . . . . . . . . . .
(221)
(1,662)
Formula One Group cash provided (used) by investing activities . . . . . . . . . . .
(210)
(413)
(641)
Net cash provided (used) by investing activities . . . . . . . . . . . . . . . . . . . . . . . $ (3,137) (1,264)
(1,319)
418
355
(546)
(267)
288
1,847
Net cash provided (used) by financing activities . . . . . . . . . . . . . . . . . . . . . . . $ 1,868
Liberty SiriusXM Group cash provided (used) by financing activities. . . . . . . $
Braves Group cash provided (used) by financing activities . . . . . . . . . . . . . . . .
Formula One Group cash provided (used) by financing activities . . . . . . . . . .
1,222
45
(35)
1,232
(135)
(113)
(38)
(286)
(1,123)
70
(373)
(1,426)
Liberty’s primary use of cash during the year ended December 31, 2017 (excluding cash used by SIRIUS XM,
Formula 1 and Braves Holdings) was the $1.6 billion net cash paid to acquire a controlling interest in Formula 1, as
discussed in note 5 of the accompanying consolidated financial statements. This investment was funded by cash on hand,
the issuance of Series C Liberty Formula One common stock to third parties and borrowings under new debt instruments.
F-16
SIRIUS XM’s primary uses of cash were the repayment of long-term debt, repurchase of outstanding SIRIUS XM
common stock, investments in Pandora and SIRIUS XM Canada, additions to property and equipment resulting from new
satellite construction, dividends paid to stockholders and the acquisition of Automatic Labs, Inc. (“Automatic”). The
SIRIUS XM uses of cash were funded by cash provided by operating activities, borrowings of debt and cash on hand.
During the year ended December 31, 2017, SIRIUS XM declared a cash dividend each quarter, and has paid in cash an
aggregate amount of $190 million, of which Liberty has received $130 million. SIRIUS XM’s board of directors expects
to declare regular quarterly dividends, in an aggregate annual amount of $0.044 per share of common stock. On January 23,
2018, SIRIUS XM’s board of directors declared a quarterly dividend on its common stock in the amount of $0.011 per
share of common stock, payable on February 28, 2018 to stockholders of record at the close of business on February 7,
2018.
Braves Holdings incurred approximately $219 million of capital expenditures during the year ended
December 31, 2017 related to the construction of the Braves Holdings ballpark facility and adjacent mixed-use complex.
Braves Holdings’ capital expenditures were funded through the use of cash on hand and borrowings of debt.
The projected uses of Liberty cash (excluding SIRIUS XM’s, Formula 1’s and Braves Holdings’ uses of cash) are
primarily the investment in new or existing businesses, debt service, including repayment of the margin loans and the
potential buyback of common stock under the approved share buyback program. Liberty expects to fund its projected uses
of cash with cash on hand, cash from operations and borrowing capacity under margin loans and outstanding credit
facilities. We may be required to make net payments of income tax liabilities to settle items under discussion with tax
authorities. Subsequent to December 31, 2017, Liberty has made investments of approximately $389 million in other
available for sale securities using SiriusXM Group corporate cash.
SIRIUS XM’s uses of cash are expected to be operating expenses, capital expenditures, including the construction
of replacement satellites, working capital requirements, legal settlements, interest payments, taxes and scheduled maturities
of outstanding debt. Liberty expects SIRIUS XM to fund its projected uses of cash with cash on hand, cash provided by
operations and borrowings under the existing credit facility.
Formula 1’s uses of cash are expected to be debt service payments, as well as continued investment in its business.
Liberty expects Formula 1 to fund its projected uses of cash with cash on hand and cash provided by operations.
Braves Holdings’ uses of cash are expected to be expenditures related to the mixed-use development and new
spring training facility. Liberty expects Braves Holdings to fund its projected uses of cash with borrowings under its
existing debt instruments.
We believe that the available sources of liquidity are sufficient to cover our projected future uses of cash.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
SIRIUS XM has entered into various programming agreements. Under the terms of these agreements,
SIRIUS XM’s obligations include fixed payments, advertising commitments and revenue sharing arrangements.
SIRIUS XM’s future revenue sharing costs are dependent upon many factors and are difficult to estimate; therefore, they
are not included in the schedule of contractual obligations below.
The Atlanta Braves have entered into long-term employment contracts with certain of their players and coaches
whereby such individuals’ compensation is guaranteed. Amounts due under guaranteed contracts as of December 31, 2017
aggregated $234 million. See the table below for more detail. In addition to the foregoing amounts, certain players and
coaches may earn incentive compensation under the terms of their employment contracts.
F-17
Information concerning the amount and timing of required payments, both accrued and off-balance sheet, under
our contractual obligations, excluding uncertain tax positions as it is indeterminable when payments will be made, is
summarized below.
Total
Less than 1 year 2 - 3 years 4 - 5 years After 5 years
Payments due by period
amounts in millions
Consolidated contractual obligations
Long-term debt (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,810
4,155
Interest payments (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,285
Programming fees (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
380
Operating lease obligations . . . . . . . . . . . . . . . . . . . . . . . .
234
Employment agreements . . . . . . . . . . . . . . . . . . . . . . . . . .
716
Other obligations (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,580
770
592
331
48
121
249
2,111
981
1,095
565
96
77
209
3,023
1,111
1,049
227
71
36
46
2,540
10,948
1,419
162
165
—
212
12,906
(1) Amounts are stated at the face amount at maturity of our debt instruments and may differ from the amounts stated in
our consolidated balance sheet to the extent debt instruments (i) were issued at a discount or premium or (ii) have
elements which are reported at fair value in our consolidated balance sheet. Amounts include capital lease obligations.
Amounts do not assume additional borrowings or refinancings of existing debt.
(2) Amounts (i) are based on our outstanding debt at December 31, 2017, (ii) assume the interest rates on our variable
rate debt remain constant at the December 31, 2017 rates and (iii) assume that our existing debt is repaid at maturity.
(3) SIRIUS XM has entered into various programming agreements under which SIRIUS XM’s obligations include fixed
payments, advertising commitments and revenue sharing arrangements. Future revenue sharing costs are dependent
upon many factors and are difficult to estimate; therefore, they are not included in the table above.
(4) Includes amounts due related to the Braves Holdings baseball stadium and mixed-use development and SIRIUS XM
satellite and transmission, marketing and distribution, satellite incentive payments, and other contractual
commitments. SIRIUS XM satellite and transmission commitments are attributable to agreements with third parties
to operate and maintain the off-site satellite telemetry, tracking and control facilities and certain components of its
terrestrial repeater networks. During the year ended December 31, 2016, SIRIUS XM entered into an agreement with
Space Systems/Loral to design and build two satellites, SXM-7 and SXM-8, for SIRIUS XM’s service. SIRIUS XM
marketing and distribution commitments primarily relate to payments to sponsors, retailers, automakers and radio
manufacturers pursuant to marketing, sponsorship and distribution agreements to promote the SIRIUS XM brand.
Boeing Satellite Systems International, Inc. and Space Systems/Loral, the manufacturers of SIRIUS XM’s in-orbit
satellites, may be entitled to future in-orbit satellite incentive performance payments based on the expected operating
performance of the satellites meeting their fifteen-year design life. Boeing may also be entitled to an additional
$10 million if the XM-4 satellite continues to operate above baseline specifications during the five years beyond the
satellite’s fifteen-year design life. Additionally, SIRIUS XM has entered into various agreements with third parties for
general operating purposes.
Critical Accounting Estimates
The preparation of our financial statements in conformity with GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Listed below are the accounting estimates that we believe
are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved
and the magnitude of the asset, liability, revenue or expense being reported. All of these accounting estimates and
assumptions, as well as the resulting impact to our financial statements, have been discussed with our audit committee.
Non-Financial Instruments. Our non-financial instrument valuations are primarily comprised of our
determination of the estimated fair value allocation of net tangible and identifiable intangible assets acquired in business
combinations, our annual assessment of the recoverability of our goodwill and other nonamortizable intangibles, such as
F-18
trademarks, and our evaluation of the recoverability of our other long-lived assets upon certain triggering events. If the
carrying value of our long-lived assets exceeds their estimated fair value, we are required to write the carrying value down
to fair value. Any such writedown is included in impairment of long-lived assets in our consolidated statement of
operations. A high degree of judgment is required to estimate the fair value of our long-lived assets. We may use quoted
market prices, prices for similar assets, present value techniques and other valuation techniques to prepare these estimates.
We may need to make estimates of future cash flows and discount rates as well as other assumptions in order to implement
these valuation techniques. Due to the high degree of judgment involved in our estimation techniques, any value ultimately
derived from our long-lived assets may differ from our estimate of fair value. As each of our operating segments has long-
lived assets, this critical accounting policy affects the financial position and results of operations of each segment.
As of December 31, 2017, the intangible assets not subject to amortization for each of our significant reporting
units were as follows (amounts in millions):
SIRIUS XM . . . . . . . . . . . . . . . . . . . . . . . .
Formula 1 . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated . . . . . . . . . . . . . . . . . . . . . . .
Goodwill FCC Licenses Other Total
8,600
—
—
8,600
$ 14,247
3,956
180
$ 18,383
931
—
143
1,074
23,778
3,956
323
28,057
We perform our annual assessment of the recoverability of our goodwill and other nonamortizable intangible
assets in the fourth quarter each year. The accounting guidance permits entities to first assess qualitative factors to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis
for determining whether it is necessary to perform the quantitative goodwill impairment test. The accounting guidance also
allows entities the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to
the quantitative impairment test. The entity may resume performing the qualitative assessment in any subsequent period.
In evaluating goodwill on a qualitative basis, the Company reviews the business performance of each reporting unit and
evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely
than not that an indicated impairment exists for any of our reporting units. The Company considers whether there are any
negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs
in doing business, management challenges, the legal environments and how these factors might impact company specific
performance in future periods. As part of the analysis, the Company also considers fair value determinations for certain
reporting units that have been made at various points throughout the current and prior year for other purposes. If based on
the qualitative analysis it is more likely than not that an impairment exists, the Company performs the quantitative
impairment test.
In January 2017, the FASB issued new accounting guidance to simplify the measurement of goodwill impairment.
Under the new guidance, an entity no longer performs a hypothetical purchase price allocation to measure goodwill
impairment. Instead, a goodwill impairment is measured using the difference between the carrying value and the fair value
of the reporting unit. The Company early adopted this guidance during the fourth quarter of 2017, with no impact to the
consolidated financial statements.
Useful Life of Broadcast/Transmission System. SIRIUS XM’s satellite system includes the costs of satellite
construction, launch vehicles, launch insurance, capitalized interest, spare satellites, terrestrial repeater network and
satellite uplink facilities. SIRIUS XM monitors its satellites for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset is not recoverable.
SIRIUS XM operates two in-orbit Sirius satellites, FM-5 and FM-6. SIRIUS XM estimates that its FM-5 and
FM-6 satellites, launched in 2009 and 2013, respectively, will operate effectively through the end of their depreciable lives
in 2024 and 2028, respectively.
SIRIUS XM operates three in-orbit XM satellites, XM-3, XM-4 and XM-5. SIRIUS XM estimates that its XM-3
and XM-4 satellites launched in 2005 and 2006, respectively, will reach the end of their depreciable lives in 2020 and
2021, respectively. The XM-5 satellite that was launched in 2010, is used as an in-orbit spare and is expected to reach the
end of its depreciable life in 2025.
F-19
SIRIUS XM’s satellites have been designed to last fifteen-years. SIRIUS XM’s in-orbit satellites may experience
component failures which could adversely affect their useful lives. SIRIUS XM monitors the operating condition of its in-
orbit satellites. If events or circumstances indicate that the depreciable lives of its in-orbit satellites have changed, the
depreciable life will be modified accordingly. If SIRIUS XM were to revise its estimates, depreciation expense would
change. For example, a 10% decrease in the expected depreciable lives of satellites and spacecraft control facilities during
2017 would have resulted in approximately $21 million of additional depreciation expense.
Income Taxes. We are required to estimate the amount of tax payable or refundable for the current year and the
deferred income tax liabilities and assets for the future tax consequences of events that have been reflected in our financial
statements or tax returns for each taxing jurisdiction in which we operate. This process requires our management to make
judgments regarding the timing and probability of the ultimate tax impact of the various agreements and transactions that
we enter into. Based on these judgments we may record tax reserves or adjustments to valuation allowances on deferred
tax assets to reflect the expected realizability of future tax benefits. Actual income taxes could vary from these estimates
due to future changes in income tax law, significant changes in the jurisdictions in which we operate, our inability to
generate sufficient future taxable income or unpredicted results from the final determination of each year’s liability by
taxing authorities. These changes could have a significant impact on our financial position.
Results of Operations—Businesses
Liberty SiriusXM Group
SIRIUS XM SIRIUS XM transmits its music, sports, entertainment, comedy, talk, news, traffic and weather
channels, as well as infotainment services, in the United States on a subscription fee basis through its two proprietary
satellite radio systems. Subscribers can also receive music and other channels, plus features such as SiriusXM On Demand,
over SIRIUS XM’s Internet radio service, including through applications for mobile devices, home devices and other
consumer electronic equipment. SIRIUS XM also provides connected vehicle services which are designed to enhance the
safety, security and driving experience for vehicle operators while providing marketing and operational benefits to
automakers and their dealers.
SIRIUS XM has agreements with every major automaker (“OEMs”) to offer satellite radios in their vehicles
through which it acquires the majority of its subscribers. SIRIUS XM also acquires subscribers through marketing to
owners and lessees of previously owned vehicles that include factory-installed satellite radios that are not currently
subscribing to SIRIUS XM’s services. SIRIUS XM distributes its radios primarily through automakers, retailers and
through its website. Satellite radio services are also offered to customers of certain rental car companies. SIRIUS XM’s
primary source of revenue is subscription fees, with most of its customers subscribing on an annual, semi-annual, quarterly
or monthly basis. SIRIUS XM offers discounts for prepaid, longer term subscription plans, as well as multiple subscription
discounts. SIRIUS XM also derives revenue from activation and other fees, the sale of advertising on select non-music
channels, the direct sale of satellite radios and accessories and other ancillary services, such as weather, data and traffic
services.
As of December 31, 2017, SIRIUS XM had approximately 32.7 million subscribers of which approximately
27.5 million were self-pay subscribers and approximately 5.2 million were paid promotional subscribers. These subscriber
totals include subscribers under regular pricing plans; discounted pricing plans; subscribers that have prepaid, including
payments either made or due from automakers for subscriptions included in the sale or lease price of a vehicle; subscribers
to SIRIUS XM Internet services who do not also have satellite radio subscriptions; and certain subscribers to SIRIUS XM’s
weather, traffic and data services who do not also have satellite radio subscriptions. Subscribers and subscription related
revenue and expenses associated with the SIRIUS XM Canada service, which had approximately 2.8 million subscribers
as of December 31, 2017, and SIRIUS XM’s connected vehicle services are not included in SIRIUS XM’s subscriber count
or subscriber-based operating metrics.
We acquired a controlling interest in SIRIUS XM on January 18, 2013 and applied purchase accounting and
consolidated the results of SIRIUS XM from that date. Prior to the acquisition of our controlling interest we maintained
an investment in SIRIUS XM accounted for using the equity method. For comparison purposes we are presenting the stand
F-20
alone results of SIRIUS XM prior to any purchase accounting adjustments in the current year for a discussion of the
operations of SIRIUS XM. For the years ended December 31, 2017, 2016 and 2015, see the reconciliation of the results
reported by SIRIUS XM to the results reported by Liberty included below. Additionally, as of December 31, 2017, there
is an approximate 30% noncontrolling interest in SIRIUS XM, and the net earnings of SIRIUS XM attributable to such
noncontrolling interest is eliminated through the noncontrolling interest line item in the consolidated statement of
operations. SIRIUS XM is a separate publicly traded company and additional information about SIRIUS XM can be
obtained through its website and its public filings, which are not incorporated by reference herein.
SIRIUS XM’s stand alone operating results were as follows:
Years ended December 31,
2017
2016
2015
amounts in millions
Subscriber revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,472
953
5,425
4,197
820
5,017
3,825
745
4,570
Operating expenses (excluding stock-based compensation included below):
Cost of subscriber services
Revenue share and royalties (excluding legal settlements) . . . . . . . . . . . . . . . . . . . .
Programming and content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer service and billing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscriber acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted OIBDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,166)
(361)
(381)
(113)
(499)
(97)
(699)
2,109
(45)
(124)
(299)
$ 1,641
(1,062)
(333)
(383)
(139)
(513)
(69)
(662)
1,856
(46)
(109)
(269)
1,432
(927)
(284)
(375)
(132)
(533)
(55)
(621)
1,643
(108)
(84)
(272)
1,179
Subscriber revenue includes subscription, activation and other fees. Subscriber revenue increased 7% and 10%
for the years ended December 31, 2017 and 2016, respectively, as compared to the corresponding prior year periods. The
increases were primarily attributable to increases in the daily weighted average number of subscribers as well as increases
in SIRIUS XM’s average monthly revenue per subscriber resulting from certain rate increases.
Other revenue includes advertising revenue, equipment revenue, royalty revenue and other ancillary revenue. For
the years ended December 31, 2017 and 2016, other revenue increased 16% and 10%, respectively, as compared to the
corresponding prior year periods. The current year increase was driven by higher revenue from Sirius XM Canada due to
the new Services Agreement and Advisory Services Agreement entered into in the second quarter of 2017, additional
revenue from the U.S. Music Royalty Fee due to an increase in the number of subscribers and subscribers paying at a
higher rate and higher revenue generated from SIRIUS XM’s connected vehicle services. The most significant change in
other revenue during the prior year was an increase in revenue from the U.S. Music Royalty Fee due to an increase in
number of subscribers and subscribers paying at a higher rate. Furthermore, advertising revenue increased during both
periods due to a greater number of advertising spots sold and transmitted along with increased rates charged per spot.
Equipment revenue increased during the current year driven by royalty revenue on certain satellite radio
components starting in the second quarter of 2016 due to SIRIUS XM’s transition to a new generation of chipsets and
revenue from the sales of connected vehicle devices since the acquisition of Automatic, partially offset by lower revenue
generated through satellite radio sales to distributors and consumers and lower OEM production. Equipment revenue
increased during the prior year due to royalties from higher OEM production and an increase in royalty revenue on certain
satellite radio components starting in the second quarter of 2016, partially offset by lower revenue generated through
satellite radio sales to distributors and consumers. Increases in other revenue during 2016 were offset by lower
F-21
non-recurring engineering fees associated with SIRIUS XM’s connected vehicle services, lower activation revenue from
SIRIUS XM Canada and a change in accounting for a programming contract in the third quarter of 2015.
Cost of subscriber services includes revenue share and royalties, programming and content costs, customer
service and billing expenses and other ancillary costs associated with providing the satellite radio service.
• Revenue Share and Royalties (excluding legal settlements) includes distribution and content provider revenue
share, royalties for transmitting content and web streaming, and advertising revenue share. Revenue share
and royalties increased 10% and 15% during 2017 and 2016, respectively, as compared to the prior year
periods. The increase during both years was primarily due to greater revenue subject to royalty and revenue
sharing agreements and increases in the statutory royalty rate for the performance of sound recordings.
During the fourth quarters of 2017 and 2016, SIRIUS XM recorded $45 and $46 million, respectively, related
to music royalty legal settlements and reserves. These expenses are included in the Revenue share and
royalties line item in the accompanying consolidated financial statements for the years ended December 31,
2017 and 2016, respectively, but have been excluded from Adjusted OIBDA for the corresponding periods
as these expenses were not incurred as a part of the Company’s normal operations for the periods, and these
lump sum amounts do not relate to the on-going performance of the business. SIRIUS XM recognized
$108 million during June 2015 for the portion of the $210 million Capitol Settlement related to SIRIUS XM’s
use of pre-1972 sound recordings for the periods prior to the Capitol Records lawsuit settlement during June
2015. The $108 million expense is included in the Revenue share and royalties line item in the accompanying
consolidated financial statements for the year ended December 31, 2015 but has been excluded from Adjusted
OIBDA for the corresponding period as this expense was not incurred as a part of the Company’s normal
operations for the period, and this lump sum amount does not relate to the on-going performance of the
business. During 2015, SIRIUS XM began recognizing pre-1972 sound recording royalty expenses in
connection with the Capitol Records lawsuit settlement. Revenue share and royalties expense in the table
above includes $43 million, $40 million and $19 million attributable to the recognition of pre-1972 sound
recording royalty expenses during 2017, 2016 and 2015, respectively.
• Programming and Content includes costs to acquire, create, promote and produce content. Programming and
content costs increased 8% and 17% during 2017 and 2016, respectively, as compared to the corresponding
prior years. The current year increase was due to the addition of video content rights, the payment for which
started during the third quarter of 2016, as well as increased personnel related costs. The prior year increase
resulted from renewed programming licenses as well as increased personnel related costs.
• Customer Service and Billing includes costs associated with the operation and management of SIRIUS XM’s
internal and third party customer service centers and SIRIUS XM’s subscriber management systems as well
as billing and collection costs, transaction fees and bad debt expense. Customer service and billing expense
decreased 1% for the year ended December 31, 2017 and increased 2% for the year ended December 31,
2016, as compared to the corresponding prior years. The current year decrease was primarily due to a decline
in call center agent rates and contact rates, partially offset by increased transaction fees based on a higher
subscriber base. The prior year increase was primarily due to costs associated with a higher subscriber base
driving greater bad debt expense, transaction fees and call center costs, partially offset by lower personnel
related costs and classification of wireless transmission costs related to SIRIUS XM’s connected vehicle
services to other expense in 2016.
• Other includes costs associated with the operation and maintenance of SIRIUS XM’s terrestrial repeater
networks; satellites; satellite telemetry, tracking and control systems; satellite uplink facilities; studios; and
delivery of SIRIUS XM’s Internet streaming service as well as costs from the sale of satellite radios,
components and accessories and provisions for inventory allowance attributable to products purchased for
resale in SIRIUS XM’s direct to consumer distribution channels. Other costs of subscriber services decreased
19% and increased 5% during the years ended December 31, 2017 and 2016, respectively, as compared to
the corresponding prior years. The current year decrease was driven by lower wireless costs associated with
SIRIUS XM’s connected vehicle services, a reduction in terrestrial repeater costs as a result of the elimination
of duplicative repeater sites, and lower sales to distributors and consumers, partially offset by increased
Internet streaming costs and the incremental costs associated with the sale of connected vehicle devices since
F-22
the acquisition of Automatic. The prior year increase was primarily due to a loss of approximately $13 million
on the disposal of certain obsolete satellite and related parts during the second quarter of 2016. Excluding the
losses on disposal of these assets, the increase was driven by inclusion of wireless transmission costs related
to SIRIUS XM’s connected vehicle services that were previously recorded to Customer service and billing
expense in 2015 and prior, partially offset by lower web streaming costs from in-sourcing certain activities.
Subscriber acquisition costs include hardware subsidies paid to radio manufacturers, distributors and automakers,
including subsidies paid for chipsets and certain other components used in manufacturing radios; device royalties for
certain radios and chipsets; product warranty obligations; and freight. The majority of subscriber acquisition costs are
incurred and expensed in advance of, or concurrent with, acquiring a subscriber. For the years ended December 31, 2017
and 2016, subscriber acquisition costs decreased 3% and 4%, respectively, as compared to the corresponding periods in
the prior year. The current year decrease was driven by reductions to OEM hardware subsidy rates, lower subsidized costs
related to the transition of chipsets and a decrease in installations. The prior year decrease was driven by lower subsidized
costs related to the transition of chipsets and reductions to OEM hardware subsidy rates, partially offset by higher radio
installations.
Other operating expense includes engineering, design and development costs consisting primarily of
compensation and related costs to develop chipsets and new products and services. For the years ended December 31, 2017
and 2016, other operating expense increased 41% and 25%, respectively. The current year increase was driven by the
development of SIRIUS XM’s connected vehicle services and additional costs associated with the development of
SIRIUS XM’s audio and video streaming products. The prior year increase was driven primarily by the inclusion of
personnel related costs from SIRIUS XM’s connected vehicle services that were previously recorded in Selling, general
and administrative expense in 2015, partially offset by lower research and development costs.
Selling, general and administrative expense includes costs of marketing, advertising, media and production,
including promotional events and sponsorships; cooperative marketing; compensation and related personnel costs;
facilities costs, finance, legal, human resources and information technology costs. Selling, general and administrative
expense increased 6% and 7% for the years ended December 31, 2017 and 2016, respectively, as compared to the
corresponding prior year periods. The current year increase was due to additional subscriber communications, retention
programs and acquisition campaigns as well as higher personnel-related costs, partially offset by the timing of certain
OEM marketing campaigns, lower legal costs, litigation reserves and consulting costs. The prior year increase was due to
higher consulting and legal costs, additional subscriber communications, retention programs and acquisition campaigns
related to SIRIUS XM’s subscriber growth and higher personnel-related costs.
Stock-based compensation increased 14% and 30% during the years ended December 31, 2017 and 2016,
respectively, as compared to the corresponding periods in the prior year. The increase in the current year is primarily due
to an increase in the number of awards granted. The increase in stock-based compensation expense during 2016 is primarily
due to an increase in stock compensation related to restricted stock units issued during 2015 and 2016 as well as an increase
in the fair value of the awards granted since January 1, 2015.
Depreciation and amortization increased 11% and decreased 1% during the years ended December 31, 2017 and
2016, respectively, as compared to the corresponding periods in the prior year. The increase in the current year was driven
by the acceleration of amortization related to a shorter useful life of certain software as well as additional assets placed in-
service. The decrease in the prior year was due to certain satellites reaching the end of their estimated service lives, partially
offset by additional assets placed in service.
F-23
The following tables reconcile the results reported by SIRIUS XM, used for comparison purposes above to
understand their operations, to the results reported by Liberty for the years ended December 31, 2017, 2016 and 2015:
Year ended December 31, 2017
Subscriber revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As reported
As reported Purchase
Accounting
by SIRIUS
Adjustments by Liberty
XM
4,472
953
5,425
4,472
953
5,425
—
—
—
Operating expenses (excluding stock-based compensation included below):
Cost of subscriber services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,021)
(499)
Subscriber acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(97)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(699)
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,109
Adjusted OIBDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(45)
(124)
(299)
1,641
Legal settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
—
—
—
—
—
—
(53)
(53)
(2,021)
(499)
(97)
(699)
2,109
(45)
(124)
(352)
1,588
Year ended December 31, 2016
Subscriber revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As reported
As reported Purchase
Accounting
by SIRIUS
Adjustments by Liberty
XM
4,197
820
5,017
4,194
820
5,014
(3)
—
(3)
Operating expenses (excluding stock-based compensation included below):
Cost of subscriber services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,917)
(513)
Subscriber acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(69)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(662)
1,856
Adjusted OIBDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(46)
(109)
(269)
1,432
Legal settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
—
—
—
(3)
—
—
(43)
(46)
(1,917)
(513)
(69)
(662)
1,853
(46)
(109)
(312)
1,386
F-24
Year ended December 31, 2015
Subscriber revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As reported Purchase
Accounting
by SIRIUS
As reported
Adjustments by Liberty
XM
3,825
745
4,570
3,807
745
4,552
(18)
—
(18)
Operating expenses (excluding stock-based compensation included below):
Cost of subscriber services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,718)
(533)
Subscriber acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(55)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(621)
1,643
Adjusted OIBDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(108)
Legal settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(84)
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(272)
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,179
35
—
—
—
17
—
(73)
(50)
(106)
(1,683)
(533)
(55)
(621)
1,660
(108)
(157)
(322)
1,073
Formula One Group
Formula 1. Formula 1 is a global motorsports business that holds exclusive commercial rights with respect to
the World Championship, an annual, approximately nine-month long, motor race-based competition in which teams
compete for the Constructors’ Championship and drivers compete for the Drivers’ Championship. The World
Championship takes place on various circuits with various Events. Formula 1 is responsible for the commercial
exploitation and development of the World Championship as well as various aspects of its management and administration.
Formula 1 derives the majority of its revenue from race promotion, broadcasting and advertising and sponsorship
arrangements. A significant majority of the race promotion, broadcasting and advertising and sponsorship contracts specify
payments in advance and annual increases in the fees payable over the course of the contracts.
Liberty acquired a controlling interest in Formula 1 on January 23, 2017 and applied acquisition accounting and
consolidated the results of Formula 1 from that date. Prior to the acquisition of our controlling interest, we maintained an
investment in Formula 1 since September 7, 2016, which was accounted for as a cost method investment. Although
Formula 1’s results are only included in Liberty’s results for the period from January 23, 2017 through December 31, 2017,
we believe a discussion of Formula 1’s results for all periods presented promotes a better understanding of the overall
results of its business. For comparison and discussion purposes, we are presenting the pro forma results of Formula 1 for
the full years ended December 31, 2017 and 2016, inclusive of acquisition accounting adjustments. The pro forma financial
information was prepared based on the historical financial information of Formula 1 and assuming the acquisition of
Formula 1 took place on January 1, 2016. The acquisition price allocation related to the Formula 1 business combination
is preliminary. Accordingly, the pro forma adjustments are based on this preliminary allocation and have been made solely
for the purpose of providing comparative pro forma financial information. The financial information below is presented
for illustrative purposes only and does not purport to represent the actual results of operations of Formula 1 had the business
combination occurred on January 1, 2016, or to project the results of operations of Liberty for any future periods. The pro
forma adjustments are based on available information and certain assumptions that Liberty management believes are
reasonable. The pro forma adjustments are directly attributable to the business combination and are expected to have a
continuing impact on the results of operations of Liberty.
F-25
Formula 1’s pro forma operating results were as follows:
Primary Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Operating expenses (excluding stock-based compensation included below):
Cost of Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted OIBDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Years ended December 31,
2016
2017
amounts in millions
1,483
301
1,784
1,502
294
1,796
(1,221)
(125)
438
(24)
(451)
(37)
(1,256)
(90)
450
—
(403)
47
Primary Formula 1 revenue represents the majority of Formula 1’s revenue and is derived from the following
streams:
•
•
•
race promotion fees earned from granting the rights to host, stage and promote each Event on the World
Championship calendar;
broadcasting fees earned from licensing the right to broadcast Events on television and other platforms,
including the internet; and
advertising and sponsorship fees earned from the sale of World Championship and Event-related advertising
and sponsorship rights.
Pro forma Primary Formula 1 revenue decreased by $19 million during the year ended December 31, 2017, as
compared to the corresponding period in the prior year. The decrease was due to one less Event during 2017 compared to
2016 and legacy contractual terms of one Event, which provided a one time significant decrease in race promotion fees
after the 2016 season through the remaining term of that contract. These decreases in race promotion revenue were partially
offset by the impact of other contractual increases. Broadcasting revenue increased during the year ended December 31,
2017 as compared to the same period in the prior year due to the impact of certain contractual rate increases, partially offset
by the net adverse impact of weaker prevailing foreign currency exchange rates used to translate a small number of fees
that were not denominated in U.S Dollars into U.S. Dollars. Advertising and sponsorship revenue increased during the
year ended December 31, 2017 as compared to the corresponding period in the prior year due to increased fees and growth
in certain arrangements, partially offset by the non-renewal of two arrangements.
Other Formula 1 revenue is generated from the operation of the Paddock Club at most Events, freight and related
logistical and travel services, support races at Events (either from the direct operation of the F2 and GP3 series which are
owned by Formula 1 or from the licensing of other third party series or individual race events), various TV production and
post-production activities, digital media services and other ancillary operations.
The $7 million increase in pro forma Other Formula 1 revenue during the year ended December 31, 2017, as
compared to the corresponding period in the prior year was primarily attributable to higher logistics and digital media
revenue, contributions from broadcasting in Ultra High Definition and higher hospitality revenue, partially offset by lower
spend by GP3 series’ competing teams during 2017 due to it being the second year of the GP3 vehicle cycle.
F-26
Years ended December 31,
2016
2017
amounts in millions
Team payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other costs of Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(919)
(302)
(1,221)
(966)
(290)
(1,256)
Pro forma Cost of Formula 1 revenue decreased approximately $35 million during the year ended December 31,
2017, as compared to the corresponding period in the prior year. Cost of Formula 1 revenue consists primarily of team
payments.
Team payments decreased by $47 million during the year ended December 31, 2017, as compared to the
corresponding period in the prior year. The decreases in pro forma team payments during 2017 were attributable to the pro
rata recognition impact of the cost recognition policy being applied to fixed and variable Prize Fund elements.
Other costs of Formula 1 revenue include hospitality costs, which are principally related to catering and other
aspects of the production and delivery of the Paddock Club, and circuit rights’ fees payable under various agreements with
race promoters to acquire certain commercial rights at Events, including the right to sell advertising, hospitality and support
race opportunities. Other costs include annual Federation Internationale de l’Automobile regulatory fees, advertising and
sponsorship commissions and those incurred in the provision and sale of freight, travel and logistical services, F2 and GP3
cars, parts and maintenance services, television production and post-production services, advertising production services
and digital and social media activities. These costs are largely variable in nature and relate directly to revenue opportunities.
The $12 million increase in other costs for the year ended December 31, 2017 as compared to the corresponding period in
the prior year is due to increasing fan engagement activities, filming in Ultra High definition and higher freight, digital
media and hospitality costs, partially offset by a lower circuit rights’ fee under the contractual arrangements of one Event
and the impact of one less Event in the year.
Selling, general and administrative expenses include personnel costs, legal, professional and other advisory fees,
bad debt expense, rental expense, information technology costs, non-Event-related travel costs, insurance premiums,
maintenance and utility costs and other general office administration costs. Pro forma Selling, general and administrative
expenses increased $35 million during the year ended December 31, 2017, respectively, as compared to the corresponding
periods in the prior year. The increases in pro forma selling, general and administrative expense during 2017 were primarily
driven by higher personnel, property, marketing and research costs and advisory fees, all due to the acquisition by Liberty
of Formula 1, partially offset by an improvement in foreign exchange related gains and lower bad debt expense during the
year ended December 31, 2017 as compared to the corresponding prior year period.
Stock-based compensation expense during 2017 relates to costs arising from grants of Series C Liberty Formula
One common stock options and restricted stock units to members of Formula 1 management during March 2017,
subsequent to the acquisition of Formula 1 by Liberty.
Depreciation and amortization includes depreciation of fixed assets and amortization of intangible assets. The
pro forma depreciation and amortization increased $48 million during the year ended December 31, 2017, as compared to
the corresponding period in the prior year. The increase was driven by an increase in amortization expense related to
intangible assets acquired in the acquisition of Formula 1 by Liberty.
Braves Group
Braves Holdings. Braves Holdings is our wholly owned subsidiary that indirectly owns and operates the Atlanta
Braves Major League Baseball club and five minor league baseball clubs (the Gwinnett Stripers, the Mississippi Braves,
the Rome Braves, the Danville Braves and the GCL Braves). Braves Holdings also operates a baseball academy in the
Dominican Republic and leases a baseball facility from a third party in connection with its academy. Braves Holdings had
exclusive operating rights to Turner Field, the home stadium of the Atlanta Braves, until December 31, 2016 pursuant to
an Operating Agreement with the Atlanta Fulton County Recreation Authority. Effective for the 2017 season, the Braves
F-27
relocated to a new ballpark in Cobb County, a suburb of Atlanta. The facility is leased from Cobb County and Cobb-
Marietta Coliseum and Exhibit Hall Authority and offers a range of activities and eateries for fans. Braves Holdings and
its affiliates participated in the construction of the new stadium and are participating in the construction of an adjacent
mixed-use development project, which we refer to as the Development Project.
Operating results attributable to the Braves Holdings were as follows.
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses (excluding stock-based compensation included
$
below):
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . .
Adjusted OIBDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Year ended December 31,
2017
2016
2015
amounts in millions
262
386
(281)
(98)
7
(46)
(67)
(106)
(224)
(54)
(16)
(9)
(32)
(57)
243
(189)
(51)
3
(10)
(31)
(38)
Revenue is derived from three primary sources: ballpark operations (ticket sales, concessions, corporate sales,
suites and premium seat fees), local broadcast rights and national broadcast, licensing and other shared Major League
Baseball (“MLB”) revenue streams. For the years ended December 31, 2017 and 2016, revenue increased $124 million
and increased $19 million, respectively, as compared to the corresponding prior years. The increase in 2017 as compared
to 2016 was primarily due to increases in the number of tickets sold, the average ticket price, concession revenue and
increases in revenue related to the Development Project. The increase in revenue for 2016 as compared to 2015 was due
to a change in ballpark retail and concession sales and increased broadcasting revenue, as well as having more home games
period over period (81 home games in 2016 versus 80 home games during 2015), although attendance per game and the
average ticket price was lower in 2016 as compared to 2015. Braves Holdings brought its retail operations in-house during
2016 and engaged a new concessions operator for the 2016 season. These contractual changes resulted in increases in
revenue, which were offset by corresponding increases in operating expenses. As a result, concession and retail revenue
increased approximately $17 million during 2016 as compared to the prior year. Broadcast revenue increased
approximately $4 million during the year ended December 31, 2016, as compared to the prior year. The increase in
broadcast revenue was due to an increase in the number of home games during 2016 and contractual rate increases.
Other operating expense primarily includes costs associated with baseball and stadium operations. For the years
ended December 31, 2017 and 2016, other operating expenses increased $57 million and increased $35 million,
respectively, as compared to the corresponding prior years. The increase in 2017 as compared to 2016 was driven primarily
by increases in player costs and higher concession, parking and security costs associated with the new stadium. The
increase in 2016 as compared to 2015 was driven primarily by in-game retail and concession operations, as discussed
above. Braves Holdings’ decision to operate its retail operations in-house during 2016 contributed to an increase in
operating expenses due to additional staff positions related to the retail operations. Additionally, certain concessions
expenses were incurred during 2016 associated with the Braves Holdings’ new concessions operator for the 2016 season.
The 2016 increase was further impacted by the acceleration of player salary expense as a result of released and injured
players as well as taxes imposed on ANLBC under the terms of the collective bargaining agreement related to certain
international player signing bonuses paid by ANLBC during 2016. These increases were partially offset by overall lower
player salaries during 2016.
Selling, general and administrative expense includes costs of marketing, advertising, finance and related
personnel costs. Selling, general and administrative expense increased $44 million and $3 million for the years ended
December 31, 2017 and 2016, respectively, as compared to the corresponding prior years. The increase in 2017 as
compared to 2016 was primarily due to costs incurred with the new stadium and the write-off of certain contractual rights
F-28
related to international players. The increase in 2016 as compared to 2015 was primarily attributable to additional
advertising costs incurred during 2016.
Stock-based compensation increased $37 million and decreased $1 million during the years ended December 31,
2017 and 2016, respectively, as compared to the corresponding prior years. The Braves Holdings three-year stock
compensation plan was approved during May 2015. Stock-based compensation expense is attributable to awards vested
during the periods presented. The increase in 2017 as compared to 2016 is due to an increase in the value of Braves
Holdings and vesting of outstanding awards. The decrease in 2016 as compared to 2015 is attributable to a decrease in the
valuation of outstanding Braves Holdings awards granted.
Depreciation and amortization increased $35 million and $1 million during the years ended December 31, 2017
and 2016, respectively, as compared to the corresponding prior years. The increase during 2017 as compared to 2016 is
due to an increase in property and equipment to support the Development Project. The increase during 2016 as compared
to 2015 is primarily due to the acceleration of depreciation on certain assets associated with the termination of the Turner
Field lease at the end of 2016.
Quantitative and Qualitative Disclosures about Market Risk.
We are exposed to market risk in the normal course of business due to our ongoing investing and financial
activities and the conduct of operations. Market risk refers to the risk of loss arising from adverse changes in stock prices
and interest rates. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and
future earnings. We have established policies, procedures and internal processes governing our management of market
risks and the use of financial instruments to manage our exposure to such risks.
We are exposed to changes in interest rates primarily as a result of our borrowing and investment activities, which
include investments in fixed and floating rate debt instruments and borrowings used to maintain liquidity and to fund
business operations. The nature and amount of our long-term and short-term debt are expected to vary as a result of future
requirements, market conditions and other factors. We manage our exposure to interest rates by maintaining what we
believe is an appropriate mix of fixed and variable rate debt. We believe this best protects us from interest rate risk. We
have achieved this mix by (i) issuing fixed rate debt that we believe has a low stated interest rate and significant term to
maturity, (ii) issuing variable rate debt with appropriate maturities and interest rates and (iii) entering into interest rate
swap arrangements when we deem appropriate.
As of December 31, 2017, our debt is comprised of the following amounts:
Variable rate debt
Fixed rate debt
Principal
amount
Weighted avg Principal Weighted avg
interest rate
amount
interest rate
1,050
417
1,157
dollar amounts in millions
3.3% $
3.2% $
4.2% $
6,511
250
4,425
5.1%
3.4%
3.5%
Liberty SiriusXM Group . . . . $
Braves Group . . . . . . . . . . . . . $
Formula One Group . . . . . . . . $
The Company is exposed to changes in stock prices primarily as a result of our significant holdings in publicly
traded securities. We continually monitor changes in stock markets, in general, and changes in the stock prices of our
holdings, specifically. We believe that changes in stock prices can be expected to vary as a result of general market
conditions, technological changes, specific industry changes and other factors. We periodically use equity collars and other
financial instruments to manage market risk associated with certain investment positions. These instruments are recorded
at fair value based on option pricing models.
At December 31, 2017, the fair value of our available-for-sale equity securities was $467 million. Had the market
price of such securities been 10% lower at December 31, 2017, the aggregate value of such securities would have been
$47 million lower. Additionally, our stock in Live Nation (an equity method affiliate) is a publicly traded security which
F-29
is not reflected at fair value in our balance sheet. This security is also subject to market risk that is not directly reflected in
our financial statements.
Financial Statements and Supplementary Data.
The consolidated financial statements of Liberty Media Corporation are included herein, beginning on Page F-32.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Controls and Procedures.
In accordance with Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the Company carried out an evaluation, under the supervision and with the participation of management, including
its chief executive officer and principal accounting and financial officer (the “Executives”), of the effectiveness of its
disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the
Executives concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2017 to
provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms.
See page F-31 for Management’s Report on Internal Control Over Financial Reporting.
See page F-34 for Report of Independent Registered Public Accounting Firm for their attestation regarding our
internal control over financial reporting.
In January 2017, the Company acquired Delta Topco Limited. As a result of the acquisition, the Company is
reviewing the internal controls of Delta Topco Limited and is making appropriate changes as deemed necessary. Except
for the changes in internal control at Delta Topco Limited, there has been no change in the Company’s internal control
over financial reporting that occurred during the three months ended December 31, 2017 that has materially affected, or is
reasonably likely to materially affect, its internal control over financial reporting.
Other Information.
None.
F-30
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Liberty Media Corporation’s (the “Company”) management is responsible for establishing and maintaining
adequate internal control over the Company’s financial reporting, as such term is defined in Rule 13a-15(f) of the Securities
Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the United States of America. Because of inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
The Company’s management assessed the effectiveness of internal control over financial reporting as of
December 31, 2017, using the criteria in Internal Control-Integrated Framework (2013), issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this evaluation the Company’s management believes
that, as of December 31, 2017, its internal control over financial reporting is effective. The Company’s assessment of
internal control over financial reporting did not include the internal controls of Delta Topco Limited which the Company
acquired in the first quarter of 2017. The amount of total assets and revenue of Delta Topco Limited included in our
consolidated financial statements as of and for the year ended December 31, 2017 was $9,461 million and $1,783 million,
respectively.
The Company’s independent registered public accounting firm audited the consolidated financial statements and
related disclosures in the Annual Report and have issued an audit report on the effectiveness of the Company’s internal
control over financial reporting. This report appears on page F-34 of this Annual Report.
F-31
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Liberty Media Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited Liberty Media Corporation and subsidiaries’ (the “Company”) internal control over financial
reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria
established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, and the
related consolidated statements of operations, comprehensive earnings (loss), cash flows, and equity for each of the years
in the three-year period ended December 31, 2017, and related notes, and our report dated February 28, 2018 expressed an
unqualified opinion on those consolidated financial statements.
The Company acquired Delta Topco Limited during 2017, and management excluded from its assessment of the
effectiveness of the Company’s internal control over financial reporting as of December 31, 2017, Delta Topco Limited’s
internal control over financial reporting associated with total assets of $9,461 million and total revenues of $1,783 million
included in the consolidated financial statements of the Company as of and for the year ended December 31, 2017. Our
audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over
financial reporting of Delta Topco Limited.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
F-32
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
Denver, Colorado
February 28, 2018
/s/ KPMG LLP
F-33
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Liberty Media Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Liberty Media Corporation and subsidiaries
(the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive
earnings (loss), cash flows, and equity for each of the years in the three-year period ended December 31, 2017 and the
related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the
results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2017, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2017, based on
criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated February 28, 2018 expressed an unqualified opinion on
the effectiveness of the Company’s internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 3 to the consolidated financial statements, the Company changed their method of accounting
for share-based payments in the year ended December 31, 2016, due to the adoption of FASB Accounting Standard Update
2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2010.
/s/ KPMG LLP
Denver, Colorado
February 28, 2018
F-34
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2017 and 2016
2017
2016
amounts in millions
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Trade and other receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in available-for-sale securities and other cost investments (note 7) . . . . . . . . . . . . . .
Investments in affiliates, accounted for using the equity method (note 8) . . . . . . . . . . . . . . . . . . .
1,029
358
376
1,763
1,114
1,750
562
240
227
1,029
1,309
1,117
Property and equipment, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,596
(1,055)
2,541
3,182
(830)
2,352
Intangible assets not subject to amortization (note 9)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FCC licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,383
8,600
1,074
28,057
6,131
640
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,996
Intangible assets subject to amortization, net (note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,345
8,600
1,073
24,018
1,072
480
31,377
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Current portion of debt (note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,250
768
1,941
20
3,979
985
5
1,877
5
2,872
Long-term debt, including $2,115 million and $1,546 million measured at fair value,
respectively (note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax liabilities (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,186
1,478
779
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,422
8,013
2,025
751
13,661
See accompanying notes to consolidated financial statements.
(continued)
F-35
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
December 31, 2017 and 2016
Stockholders' equity (notes 12,14 and 16):
Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued . . . . . . . . . . . . $
Series A Liberty SiriusXM common stock, $.01 par value. Authorized 2,000,000,000 shares at
December 31, 2017; issued and outstanding 102,701,972 shares at December 31, 2017 and
102,390,088 shares at December 31, 2016 (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series A Liberty Braves common stock, $.01 par value. Authorized 200,000,000 shares at
December 31, 2017; issued and outstanding 10,243,259 shares at December 31, 2017 and
10,231,185 shares at December 31, 2016 (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series A Liberty Formula One common stock, $.01 par value. Authorized 500,000,000 shares
at December 31, 2017; issued and outstanding 25,649,611 shares at December 31, 2017 and
25,593,352 shares at December 31, 2016 (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series B Liberty SiriusXM common stock, $.01 par value. Authorized 75,000,000 shares at
December 31, 2017; issued and outstanding 9,821,531 shares at December 31, 2017 and
9,870,856 shares at December 31, 2016 (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series B Liberty Braves common stock, $.01 par value. Authorized 7,500,000 shares at
December 31, 2017; issued and outstanding 981,860 shares at December 31, 2017 and
986,791 shares at December 31, 2016 (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series B Liberty Formula One common stock, $.01 par value. Authorized 18,750,000 shares
at December 31, 2017; issued and outstanding 2,454,448 shares at December 31, 2017 and
2,466,778 shares at December 31, 2016 (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Liberty SiriusXM common stock, $.01 par value. Authorized 2,000,000,000 shares at
December 31, 2017; issued and outstanding 223,588,953 shares at December 31, 2017 and
222,936,204 shares at December 31, 2016 (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Liberty Braves common stock, $.01 par value. Authorized 200,000,000 shares at
December 31, 2017; issued and outstanding 39,723,440 shares at December 31, 2017 and
38,215,276 shares at December 31, 2016 (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Liberty Formula One common stock, $.01 par value. Authorized 500,000,000 shares
at December 31, 2017; issued and outstanding 202,720,588 shares at December 31, 2017 and
55,737,179 shares at December 31, 2016 (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive earnings (loss), net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests in equity of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017
2016
amounts in millions
—
—
1
1
—
—
—
—
—
—
—
—
—
—
2
2
—
—
2
3,892
(35)
13,081
16,943
5,631
22,574
1
87
(62)
11,727
11,756
5,960
17,716
Commitments and contingencies (note 17)
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,996
31,377
See accompanying notes to consolidated financial statements.
F-36
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Statements Of Operations
Years ended December 31, 2017, 2016 and 2015
Revenue:
Subscriber revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating costs and expenses, including stock-based compensation (note 3):
4,473
1,783
1,338
7,594
4,194
—
1,082
5,276
3,807
—
988
4,795
2017
2016
2015
amounts in millions
Cost of subscriber services (exclusive of depreciation shown separately below):
Revenue share and royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Programming and content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer service and billing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscriber acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal settlement, net (note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of earnings (losses) of affiliates, net (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized and unrealized gains (losses) on financial instruments, net (note 6) . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less net earnings (loss) attributable to the noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) attributable to Liberty stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,210
388
385
119
1,219
499
394
1,162
—
824
6,200
1,394
(591)
104
(88)
8
(567)
827
1,063
1,890
536
1,354
Net earnings (loss) attributable to Liberty stockholders (note 2):
Liberty Media Corporation common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
1,124
(25)
255
$
1,354
1,109
354
387
144
—
513
306
886
(511)
354
3,542
1,734
(362)
14
37
(4)
(315)
1,419
(495)
924
244
680
377
297
(30)
36
680
1,035
267
380
141
—
533
262
861
—
362
3,841
954
(328)
(40)
(140)
12
(496)
458
(210)
248
184
64
64
—
—
—
64
(continued)
See accompanying notes to consolidated financial statements.
F-37
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Statements Of Operations (Continued)
Years ended December 31, 2017, 2016 and 2015
2017
2016
2015
Basic net earnings (loss) attributable to Liberty stockholders per common share (notes 2
and 3)
Series A, B and C Liberty Media Corporation common stock . . . . . . . . . . . . . . . . . . . . . .
Series A, B and C Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series A, B and C Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series A, B and C Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
NA
3.35
(0.51)
1.23
0.19
1.13
0.89 NA
(0.65) NA
0.43 NA
Diluted net earnings (loss) attributable to Liberty stockholders per common share (notes 2
and 3)
Series A, B and C Liberty Media Corporation common stock . . . . . . . . . . . . . . . . . . . . . .
Series A, B and C Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series A, B and C Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series A, B and C Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
NA
3.31
(0.51)
1.21
1.12
0.19
0.88 NA
(0.65) NA
0.42 NA
See accompanying notes to consolidated financial statements.
F-38
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Statements Of Comprehensive Earnings (Loss)
Years ended December 31, 2017, 2016 and 2015
2017
2016 2015
amounts in millions
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,890
Other comprehensive earnings (loss), net of taxes:
924
248
Unrealized holding gains (losses) arising during the period . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of other comprehensive earnings (loss) of equity affiliates . . . . . . . . . . . . . . . . . . .
Other comprehensive earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less comprehensive earnings (loss) attributable to the noncontrolling interests . . . . . . . .
Comprehensive earnings (loss) attributable to Liberty stockholders . . . . . . . . . . . . . . . . . .
Comprehensive earnings (loss) attributable to Liberty stockholders:
Liberty Media Corporation common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
24
14
35
1,925
544
$ 1,381
$
—
1,142
(28)
267
$ 1,381
—
4
(14)
(10)
914
245
669
382
295
(30)
22
669
—
(42)
(7)
(49)
199
165
34
34
—
—
—
34
See accompanying notes to consolidated financial statements.
F-39
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Consolidated Statements Of Cash Flows
Years ended December 31, 2017, 2016 and 2015
2017
2015
2016
amounts in millions
(see note 5)
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of (earnings) loss of affiliates, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized and unrealized (gains) losses on financial instruments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses (gains) on dilution of investment in affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other charges (credits), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities
$
1,890
924
824
230
(104)
88
16
(3)
48
(1,064)
4
354
150
(14)
(37)
11
—
24
427
30
248
362
204
40
140
6
1
—
175
19
Current and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
(247)
1,732
25
277
2,171
(208)
245
1,232
Cash flows from investing activities:
Cash proceeds from dispositions of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash paid for the acquisition of Formula 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds (payments) from settlement of financial instruments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in and loans to cost and equity investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of loans and other cash receipts from cost and equity investees . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expended for property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of short term investments and other marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of short term investments and other marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
Borrowings of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of Series C Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of Liberty common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares repurchased by subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Liberty Braves common stock rights offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid by subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes paid in lieu of shares issued for stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
(1,647)
—
(862)
—
(517)
—
—
(132)
(3,137)
6,697
(5,107)
1,938
—
(1,409)
—
(60)
(135)
(56)
1,868
4
467
562
1,029
$
62
—
(1)
(784)
48
(568)
(258)
273
(36)
(1,264)
2,745
(1,749)
—
—
(1,674)
203
(16)
(58)
3
(546)
—
361
201
562
175
—
(322)
(19)
—
(296)
(174)
358
(8)
(286)
2,213
(1,196)
—
(350)
(2,018)
—
—
(80)
5
(1,426)
—
(480)
681
201
See accompanying notes to consolidated financial statements.
F-40
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F-41
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
(1) Basis of Presentation
The accompanying consolidated financial statements of Liberty Media Corporation (formerly named Liberty
Spinco, Inc.; see discussion below pertaining to the Starz Spin-Off (defined below)) (“Liberty,” “we,” “our,” “us” or the
“Company” unless the context otherwise requires) represent a consolidation of certain media and entertainment related
assets and businesses. All significant intercompany accounts and transactions have been eliminated in the consolidated
financial statements.
Liberty, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the media
and entertainment industries primarily in North America and the United Kingdom. Our significant subsidiaries include
Sirius XM Holdings Inc. (“SIRIUS XM”), Formula 1 and Braves Holdings, LLC (“Braves Holdings”). Our significant
investment accounted for under the equity method of accounting is Live Nation Entertainment, Inc. (“Live Nation”). As
discussed in notes 2 and 7, Liberty obtained a nearly 20% interest in Delta Topco Limited (“Delta Topco”), the parent
company of Formula 1, a global motorsports business, during 2016 and acquired the remaining interests, other than a
nominal number of shares held by certain Formula 1 teams, during January 2017.
In September 2011, Liberty Interactive Corporation (“Liberty Interactive” and formerly named Liberty Media
Corporation) completed the split-off of its former wholly-owned subsidiary (then known as Liberty Media Corporation)
from its Liberty Interactive tracking stock group (the “Split-Off”).
In January 2013, Starz (now known as Starz Acquisition, LLC and formerly known as Liberty Media Corporation)
spun-off (the “Starz Spin-Off”) its then-former wholly-owned subsidiary, which, at the time of the Starz Spin-Off, held all
of the businesses, assets and liabilities of Starz not associated with Starz, LLC (with the exception of the Starz, LLC office
building). The transaction was effected as a pro-rata dividend of shares of Liberty to the stockholders of Starz.
Also in January 2013, Liberty obtained a controlling interest and began consolidating SIRIUS XM. SIRIUS XM,
since the date of our investment, has repurchased approximately 2.5 billion SIRIUS XM shares for approximately $9.4
billion. Liberty continues to maintain a controlling interest in SIRIUS XM following the completion of the share
repurchases. As of December 31, 2017, we owned approximately 70% of the outstanding equity interest in SIRIUS XM.
During 2014, Liberty’s board of directors approved the issuance of shares of its Series C Liberty Media
Corporation common stock to holders of its Series A and Series B Liberty Media Corporation common stock, effected by
means of a dividend. On July 23, 2014, holders of Series A and Series B Liberty Media Corporation common stock
received a dividend of two shares of Series C Liberty Media Corporation common stock for each share of Series A or
Series B Liberty Media Corporation common stock held by them as of July 7, 2014. Additionally, in connection with the
Series C Liberty Media Corporation common stock issuance and the Broadband Spin-Off (defined below), outstanding
Series A Liberty Media Corporation common stock warrants have been adjusted, as well as the number of shares covered
by outstanding cash convertible note hedges and purchased call options (the “Bond Hedge Transaction”). See note 10 for
further discussion regarding the warrants and Bond Hedge Transaction.
On November 4, 2014, Liberty completed the spin-off to its stockholders common stock of a newly formed
company called Liberty Broadband Corporation (“Liberty Broadband”) (the “Broadband Spin-Off”). In the Broadband
Spin-Off, record holders of Series A, Series B and Series C Liberty Media Corporation common stock received one share
of the corresponding series of Liberty Broadband common stock for every four shares of common stock held by them as
of the record date for the Broadband Spin-Off, with cash paid in lieu of fractional shares.
During August 2014, Liberty Interactive completed the distribution of Liberty TripAdvisor Holdings, Inc.
(“Liberty TripAdvisor”) (the “TripAdvisor Spin-Off”). During July 2016, Liberty Interactive completed the spin-off of
CommerceHub, Inc. (“CommerceHub”) (the “CommerceHub Spin-Off”). During November 2016, Liberty Interactive
F-42
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
completed the split-off of Liberty Expedia Holdings, Inc. (“Expedia Holdings”) (the “Expedia Holdings Split-Off”).
Following the Split-Off, Starz Spin-Off, TripAdvisor Spin-Off, Broadband Spin-Off, CommerceHub Spin-Off and Expedia
Holdings Split-Off, Liberty, Liberty Interactive, Starz, Liberty TripAdvisor, Liberty Broadband, CommerceHub and
Expedia Holdings operate as separate publicly traded companies, none of which has any stock ownership, beneficial or
otherwise, in the other (except that Liberty Interactive owns shares of Liberty Broadband’s Series C non-voting common
stock). In connection with the Split-Off, Starz Spin-Off, TripAdvisor Spin-Off, Broadband Spin-Off, CommerceHub Spin-
Off and Expedia Holdings Split-Off, Liberty entered into certain agreements with Liberty Interactive, Starz, Liberty
TripAdvisor, Liberty Broadband, CommerceHub and Expedia Holdings, respectively, in order to govern ongoing
relationships between the companies and to provide for an orderly transition. As a result, these entities are considered
related parties of the Company for accounting purposes through the dates of the respective transactions. These agreements
include Reorganization Agreements (excluding CommerceHub, Expedia Holdings and Liberty TripAdvisor), Services
Agreements, Facilities Sharing Agreements (excluding CommerceHub), a Lease Agreement (in the case of the Starz Spin-
Off only) and with respect to Starz and Liberty Broadband, Tax Sharing Agreements. The Reorganization, Services and
Facilities Sharing Agreements entered into with Liberty Interactive were assigned from Starz to Liberty in connection with
the Starz Spin-Off.
The Reorganization Agreements provide for, among other things, provisions governing the relationships between
Liberty and each of Liberty Interactive, Starz and Liberty Broadband following the Split-Off, Starz Spin-Off and
Broadband Spin-Off, respectively, including certain cross-indemnities. Pursuant to the Services Agreements, Liberty
provides Liberty Interactive, Starz, Liberty TripAdvisor, Liberty Broadband, CommerceHub and Expedia Holdings with
general and administrative services including legal, tax, accounting, treasury and investor relations support. Liberty
Interactive, Starz, Liberty TripAdvisor, Liberty Broadband, CommerceHub and Expedia Holdings reimburse Liberty for
direct, out-of-pocket expenses incurred by Liberty in providing these services and for Liberty Interactive’s and Starz’s
allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent
providing services to each respective company. Liberty TripAdvisor, Liberty Broadband, CommerceHub and Expedia
Holdings reimburse Liberty for shared services and personnel based on a flat fee. Under the Facilities Sharing Agreements,
Liberty shares office space and related amenities with Liberty Interactive, Starz, Liberty TripAdvisor, Liberty Broadband
and Expedia Holdings at Liberty’s corporate headquarters. Under these various agreements, approximately $24 million,
$21 million and $23 million of these allocated expenses were reimbursed to Liberty during the years ended December 31,
2017, 2016 and 2015, respectively. Under the Lease Agreement, Starz leases its corporate headquarters from Liberty. The
Lease Agreement with Starz for their corporate headquarters requires a payment of approximately $4 million annually,
subject to certain increases based on the Consumer Price Index. The Lease Agreement expires on December 31, 2023 and
contains an extension option.
The Tax Sharing Agreements provide for the allocation and indemnification of tax liabilities and benefits between
Liberty and each of Starz and Liberty Broadband as well as other agreements related to tax matters. Among other things,
pursuant to the Tax Sharing Agreements, Liberty has generally agreed to indemnify Starz and Liberty Broadband for taxes
and losses resulting from the failure of the Starz Spin-Off and the Broadband Spin-Off, respectively, to qualify for tax-free
treatment. However, Starz will be responsible for any such taxes and losses related to the Starz Spin-Off which (i) result
primarily from the breach of certain restrictive covenants made by Starz, or (ii) result from Section 355(e) of the Internal
Revenue Code of 1986 (the “Code”) applying to the Starz Spin-Off as a result of the Starz Spin-Off being part of a plan
(or series of related transactions) pursuant to which one or more persons acquire a 50-percent or greater interest (measured
by vote or value) in the stock of Starz, and Liberty Broadband will be responsible for any such taxes and losses related to
the Broadband Spin-Off which (i) result primarily from the breach of certain restrictive covenants made by Liberty
Broadband, or (ii) result from Section 355(e) of the Code applying to the Broadband Spin-Off as a result of the Broadband
Spin-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire a 50-percent
or greater interest (measured by vote or value) in the stock of Liberty Broadband. In February 2014, the IRS and Starz
entered into a closing agreement which provided that the Starz Spin-Off qualified for tax-free treatment to Starz and
F-43
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Liberty. In September 2015, Liberty entered into a closing agreement with the IRS which provided that the Broadband
Spin-Off qualified for tax-free treatment.
The Company’s additional paid-in capital balance was in a deficit position as of December 31, 2015. In order to
maintain a zero balance in the additional paid-in capital account, we reclassified the amount of the deficit ($499 million)
to retained earnings as of December 31, 2015.
(2) Tracking Stocks
During November 2015, Liberty’s board of directors authorized management to pursue a recapitalization of the
Company’s common stock into three new tracking stock groups, one to be designated as the Liberty Braves common stock,
one to be designated as the Liberty Media common stock and one to be designated as the Liberty SiriusXM common stock
(the “Recapitalization”), and to cause to be distributed subscription rights related to the Liberty Braves common stock
following the creation of the new tracking stocks.
The Recapitalization was completed on April 15, 2016 and the newly issued shares commenced trading or
quotation in the regular way on the Nasdaq Global Select Market or the OTC Markets, as applicable, on Monday, April 18,
2016. In the Recapitalization, each issued and outstanding share of Liberty Media Corporation common stock was
reclassified and exchanged for (a) 1 share of the corresponding series of Liberty SiriusXM common stock, (b) 0.1 of a
share of the corresponding series of Liberty Braves common stock and (c) 0.25 of a share of the corresponding series of
Liberty Formula One common stock on April 15, 2016. Cash was paid in lieu of the issuance of any fractional shares. In
May 2016, the IRS completed its review of the Recapitalization and notified Liberty that it agreed with the nontaxable
characterization of the transaction. The operating results prior to the Recapitalization are attributed to Liberty stockholders
in the aggregate. However, the information in the following footnotes has been presented by tracking stock groups for all
periods presented in order to enhance the information provided to users of these financial statements.
Following the creation of the tracking stocks, Series A, Series B and Series C Liberty SiriusXM common stock
trade under the symbols LSXMA/B/K, respectively; Series A, Series B and Series C Liberty Braves common stock trade
or are quoted under the symbols BATRA/B/K respectively; and Series A, Series B and Series C Liberty Media common
stock traded or were quoted under the symbols LMCA/B/K, respectively. Shortly following the Second Closing (as defined
below) of the acquisition of Formula 1, the Liberty Media Group and Liberty Media common stock were renamed the
Liberty Formula One Group (the “Formula One Group”) and the Liberty Formula One common stock, respectively, and
the corresponding ticker symbols for the Series A, Series B and Series C Liberty Media common stock were changed to
FWONA/B/K, respectively. Each series (Series A, Series B and Series C) of the Liberty SiriusXM common stock trades
on the Nasdaq Global Select Market. Series A and Series C Liberty Braves common stock trade on the Nasdaq Global
Select Stock Market and Series B Liberty Braves common stock is quoted on the OTC Markets. Series A and Series C
Liberty Formula One common stock continue to trade on the Nasdaq Global Select Market and the Series B Liberty
Formula One common stock continues to be quoted on the OTC Markets. Although the Second Closing, and the
corresponding tracking stock name and the ticker symbol change, were not completed until January 23 and 24, 2017,
respectively, historical information of the Liberty Media Group and Liberty Media common stock is referred to herein as
the Formula One Group and Liberty Formula One common stock, respectively.
In addition, following the creation of the new tracking stocks, Liberty distributed to holders of its Liberty Braves
common stock subscription rights to acquire shares of Series C Liberty Braves common stock in order to raise capital to
repay the Intergroup Note (as defined below) and for working capital purposes. In the rights distribution, Liberty
distributed 0.47 of a Series C Liberty Braves subscription right for each share of Series A, Series B or Series C Liberty
Braves common stock held as of 5:00 p.m., New York City time, on May 16, 2016. Fractional Series C Liberty Braves
subscription rights were rounded up to the nearest whole right. Each whole Series C Liberty Braves subscription right
entitled the holder to purchase, pursuant to the basic subscription privilege, one share of Liberty’s Series C Liberty Braves
F-44
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
common stock at a subscription price of $12.80, which was equal to an approximate 20% discount to the trading day
volume weighted average trading price of Series C Liberty Braves common stock for the 18-day trading period ending on
May 11, 2016. Each Series C Liberty Braves subscription right also entitled the holder to subscribe for additional shares
of Series C Liberty Braves common stock that were unsubscribed for in the rights offering pursuant to an oversubscription
privilege. The rights offering commenced on May 18, 2016, which was also the ex-dividend date for the distribution of the
Series C Liberty Braves subscription rights. The rights offering expired at 5:00 p.m. New York City time, on June 16, 2016
and was fully subscribed with 15,833,634 shares of Series C Liberty Braves common stock issued to those rightsholders
exercising basic and, if applicable, oversubscription privileges. Approximately $150 million of the proceeds from the rights
offering were used to repay the outstanding balance on the Intergroup Note and accrued interest to Liberty. The remaining
proceeds were used for development costs attributed to the Braves Group. In September 2016, the IRS completed its review
of the distribution of the Series C Liberty Braves subscription rights and notified Liberty that it agreed with the nontaxable
characterization of the distribution.
Additionally, as a result of the Recapitalization, Liberty’s 1.375% Cash Convertible Senior Notes due 2023 are
now convertible into cash based on the product of the conversion rate specified in the indenture and the basket of tracking
stocks into which each outstanding share of Series A Liberty Media Corporation common stock was reclassified (the
“Securities Basket”). The Series A Liberty Braves common stock component of the Securities Basket was subsequently
adjusted pursuant to anti-dilution adjustments arising out of the distribution of subscription rights to purchase shares of
Series C Liberty Braves common stock made to all holders of Liberty Braves common stock. Furthermore, the Company
entered into amended agreements with the counterparties with regard the Recapitalization-related adjustments to the
outstanding Series A Liberty Media Corporation common stock warrants as well as the outstanding cash convertible note
hedges and purchased call options. See note 10 for a more detailed discussion of the amendments made to these financial
instruments as a result of the Recapitalization.
As discussed in more detail in note 5, on September 7, 2016 Liberty, through its indirect wholly owned subsidiary
Liberty GR Cayman Acquisition Company, entered into two definitive stock purchase agreements relating to the
acquisition of Delta Topco. The transactions contemplated by the first purchase agreement were completed on September 7,
2016, resulting in the acquisition of slightly less than a 20% minority stake in Formula 1 on an undiluted basis. On
October 27, 2016 under the terms of the first purchase agreement, Liberty acquired an additional incremental equity interest
of Delta Topco, maintaining Liberty’s investment in Delta Topco on an undiluted basis and increasing slightly to 19.1%
on a fully diluted basis. Liberty’s interest in Delta Topco and by extension Formula 1 is attributed to the Liberty Formula
One Group (the “Formula One Group”). Liberty acquired 100% of the fully diluted equity interests of Delta Topco, other
than a nominal number of shares held by certain Formula 1 teams, in a closing under the second purchase agreement
(following the unwind of the first purchase agreement) on January 23, 2017 (the “Second Closing”). Liberty’s acquired
interest in Formula 1, along with existing Formula 1 cash and debt (which is non-recourse to Liberty), is attributed to the
Formula One Group.
A tracking stock is a type of common stock that the issuing company intends to reflect or “track” the economic
performance of a particular business or “group,” rather than the economic performance of the company as a whole. While
the Liberty SiriusXM Group, Liberty Braves Group (the “Braves Group”) and Formula One Group have separate
collections of businesses, assets and liabilities attributed to them, no group is a separate legal entity and therefore cannot
own assets, issue securities or enter into legally binding agreements. Therefore, the Liberty SiriusXM Group, Braves Group
and Formula One Group do not represent separate legal entities, but rather represent those businesses, assets and liabilities
that have been attributed to each respective group. Holders of tracking stock have no direct claim to the group’s stock or
assets and therefore, do not own, by virtue of their ownership of a Liberty tracking stock, any equity or voting interest in
a public company, such as SIRIUS XM or Live Nation, in which Liberty holds an interest and that is attributed to a Liberty
tracking stock group, such as the Liberty SiriusXM Group or the Formula One Group. Holders of tracking stock are also
not represented by separate boards of directors. Instead, holders of tracking stock are stockholders of the parent corporation,
with a single board of directors and subject to all of the risks and liabilities of the parent corporation.
F-45
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
The Liberty SiriusXM common stock is intended to track and reflect the separate economic performance of the
businesses, assets and liabilities attributed to the Liberty SiriusXM Group. Liberty attributed to the Liberty SiriusXM
Group its subsidiary SIRIUS XM, corporate cash, and its margin loan obligation incurred by a wholly-owned special
purpose subsidiary of Liberty. As of December 31, 2017, the Liberty SiriusXM Group has cash and cash equivalents of
approximately $615 million, which includes $69 million of subsidiary cash.
The Liberty Braves common stock is intended to track and reflect the separate economic performance of the
businesses, assets and liabilities attributed to the Braves Group. Liberty attributed to the Braves Group its subsidiary,
Braves Holdings, which indirectly owns the Atlanta Braves Major League Baseball Club (“ANLBC” or the “Atlanta
Braves”) and certain assets and liabilities associated with ANLBC’s stadium and mixed use development project (the
“Development Project”) and corporate cash. Also upon the Recapitalization, Liberty had attributed to the Braves Group
all liabilities arising under a note from Braves Holdings to Liberty, with a total capacity of up to $165 million of borrowings
by Braves Holdings (the “Intergroup Note”) relating to funds borrowed and used for investment in the Development
Project. As previously discussed, the $150 million outstanding under the Intergroup Note was repaid during June 2016
using proceeds from the subscription rights offering, and the Intergroup Note agreement was cancelled. The remaining
proceeds were attributed to the Braves Group. As of December 31, 2017, the Braves Group has cash and cash equivalents
of approximately $132 million, which includes $55 million of subsidiary cash.
The Liberty Formula One common stock is intended to track and reflect the separate economic performance of
the businesses, assets and liabilities attributed to the Formula One Group. Liberty attributed to the Formula One Group all
of the businesses, assets and liabilities of Liberty other than those specifically attributed to the Braves Group or the Liberty
SiriusXM Group, including Liberty’s interests in Formula 1 and Live Nation, a minority equity investment in Time Warner,
Inc. (“Time Warner”), the recovery received in connection with the Vivendi lawsuit, cash as well as Liberty’s 1.375% Cash
Convertible Notes due 2023 and related financial instruments, Liberty’s 1% Cash Convertible Notes due 2023 and Liberty’s
2.25% Exchangeable Senior Debentures due 2046. As of December 31, 2017, the Formula One Group has cash and cash
equivalents of approximately $282 million, which includes $165 million of subsidiary cash.
As part of the Recapitalization, the Formula One Group initially held a 20% intergroup interest in the Braves
Group. As a result of the rights offering, the number of notional shares representing the intergroup interest held by the
Formula One Group was adjusted to 9,084,940, representing a 15.1% intergroup interest in the Braves Group at
December 31, 2017. The intergroup interest is a quasi-equity interest which is not represented by outstanding shares of
common stock; rather, the Formula One Group has an attributed value in the Braves Group which is generally stated in
terms of a number of shares of Series C Liberty Braves common stock issuable to the Formula One Group with respect to
its interest in the Braves Group. The intergroup interest may be settled, at the discretion of the Company’s board of
directors, through the transfer of newly issued shares of Liberty Braves common stock, cash and/or other assets to the
Formula One Group. Accordingly, the intergroup interest attributable to the Formula One Group is presented as an asset
and the intergroup interest attributable to the Braves Group is presented as a liability in the attributed financial statements
and the offsetting amounts between tracking stock groups are eliminated in consolidation. The intergroup interest will
remain outstanding until the cancellation of the outstanding interest, at the discretion of the Company’s board of directors,
through transfer of securities, cash and/or other assets from the Braves Group to the Formula One Group.
See page F-99 of this Annual Report for unaudited attributed financial information for Liberty’s tracking stock
groups.
F-46
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
(3) Summary of Significant Accounting Policies
Cash and Cash Equivalents
Cash equivalents consist of investments which are readily convertible into cash and have maturities of three
months or less at the time of acquisition.
Receivables
Receivables are reflected net of an allowance for doubtful accounts and sales returns. Such allowance aggregated
$12 million and $9 million at December 31, 2017 and 2016, respectively. Activity in the year ended December 31, 2017
included an increase of $57 million of bad debt charged to expense and $55 million of write-offs. Activity in the year ended
December 31, 2016 included an increase of $56 million of bad debt charged to expense and $53 million of write-offs.
Activity in the year ended December 31, 2015 included an increase of $47 million of bad debt charged to expense and
$49 million of write-offs.
Investments
All marketable equity and debt securities held by the Company are classified as available-for-sale (“AFS”) and
are carried at fair value generally based on quoted market prices. U.S. generally accepted accounting principles (“GAAP”)
permit entities to choose to measure many financial instruments, such as AFS securities, and certain other items at fair
value and to recognize the changes in fair value of such instruments in the entity’s statement of operations (the “fair value
option”). Under other relevant GAAP, entities were required to recognize changes in fair value of AFS securities in the
balance sheet in accumulated other comprehensive earnings. Liberty previously had entered into economic hedges for
certain of its AFS securities (although such instruments are not accounted for as fair value hedges by the Company).
Changes in the fair value of these economic hedges were reflected in Liberty’s statement of operations as unrealized gains
(losses). In order to better match the changes in fair value of the subject AFS securities and the changes in fair value of the
corresponding economic hedges in the Company’s financial statements, Liberty elected the fair value option for certain of
its AFS securities (“Fair Value Option Securities”). Accordingly, changes in the fair value of Fair Value Option Securities,
as determined by quoted market prices, are reported in realized and unrealized gain (losses) on financial instruments in the
accompanying consolidated statements of operations. The total value of AFS equity securities for which the Company has
elected the fair value option aggregated $467 million and $489 million as of December 31, 2017 and 2016, respectively.
Other investments in which the Company’s ownership interest is less than 20% and are not considered marketable
securities are carried at cost.
For those investments in affiliates in which the Company has the ability to exercise significant influence, the
equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize
the Company’s share of net earnings or losses of the affiliate as they occur rather than as dividends or other distributions
are received. Losses are limited to the extent of the Company’s investment in, advances to and commitments for the
investee. In the event the Company is unable to obtain accurate financial information from an equity affiliate in a timely
manner, the Company records its share of earnings or losses of such affiliate on a lag.
Changes in the Company’s proportionate share of the underlying equity of an equity method investee, which result
from the issuance of additional equity securities by such equity investee, are recognized in the statement of operations
through the other, net line item. To the extent there is a difference between our ownership percentage in the underlying
equity of an equity method investee and our carrying value, such difference is accounted for as if the equity method investee
were a consolidated subsidiary.
F-47
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
The Company continually reviews its equity investments and its AFS securities which are not Fair Value Option
Securities to determine whether a decline in fair value below the cost basis is other than temporary. The primary factors
the Company considers in its determination are the length of time that the fair value of the investment is below the
Company’s carrying value; the severity of the decline; and the financial condition, operating performance and near term
prospects of the investee. In addition, the Company considers the reason for the decline in fair value, be it general market
conditions, industry specific or investee specific; analysts’ ratings and estimates of 12-month share price targets for the
investee; changes in stock price or valuation subsequent to the balance sheet date; and the Company’s intent and ability to
hold the investment for a period of time sufficient to allow for a recovery in fair value. If the decline in fair value is deemed
to be other than temporary, the cost basis of the security is written down to fair value. In situations where the fair value of
an investment is not evident due to a lack of a public market price or other factors, the Company uses its best estimates
and assumptions to arrive at the estimated fair value of such investment. The Company’s assessment of the foregoing
factors involves a high degree of judgment and accordingly, actual results may differ materially from the Company’s
estimates and judgments. Writedowns for AFS securities which are not Fair Value Option Securities (as defined below) are
included in the consolidated statements of operations as other than temporary declines in fair values of investments.
Writedowns for equity method investments are included in share of earnings (losses) of affiliates.
Fair Value of Financial Instruments
In January 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance that is
intended to improve the recognition and measurement of financial instruments. The new guidance requires equity
investments with readily determinable fair values (except those accounted for under the equity method of accounting or
those that result in consolidation) to be measured at fair value with changes in fair value recognized in net income and
simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a
qualitative assessment to identify impairment. The new standard is effective for the Company for fiscal years and interim
periods beginning after December 15, 2017. The Company does not expect this new guidance will have a material impact
to its consolidated financial statements or related disclosures.
Derivative Instruments and Hedging Activities
All of the Company’s derivatives, whether designated in hedging relationships or not, are recorded on the balance
sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and
of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow
hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive earnings
and are recognized in the statement of operations when the hedged item affects earnings. Ineffective portions of changes
in the fair value of cash flow hedges are recognized in earnings. If the derivative is not designated as a hedge, changes in
the fair value of the derivative are recognized in earnings. None of the Company’s derivatives are currently designated as
hedges.
The fair value of certain of the Company’s derivative instruments are estimated using the Black-Scholes model.
The Black-Scholes model incorporates a number of variables in determining such fair values, including expected volatility
of the underlying security and an appropriate discount rate. The Company obtained volatility rates from pricing services
based on the expected volatility of the underlying security over the remaining term of the derivative instrument. A discount
rate was obtained at the inception of the derivative instrument and updated each reporting period, based on the Company’s
estimate of the discount rate at which it could currently settle the derivative instrument. The Company considered its own
credit risk as well as the credit risk of its counterparties in estimating the discount rate. Considerable management judgment
was required in estimating the Black-Scholes variables.
F-48
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Property and Equipment
Property and equipment consisted of the following:
Estimated Useful Life December 31, 2017 December 31, 2016
amounts in millions
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . .
Support equipment . . . . . . . . . . . . . . . . . . . .
Satellite system . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . .
Total property and equipment . . . . . . . .
NA
10 - 40 years
3 - 20 years
15 years
NA
$
$
217
974
514
1,676
215
3,596
191
144
316
1,668
863
3,182
Property and equipment, including significant improvements, is stated at cost. Depreciation is computed using
the straight-line method using estimated useful lives. Depreciation expense for the years ended December 31, 2017, 2016
and 2015 was $230 million, $186 million and $207 million, respectively.
A portion of the interest on funds borrowed to finance the construction of the Braves ballpark and mixed-use
development as well as the launch of SIRIUS XM’s satellites and launch vehicles is capitalized. Capitalized interest is
recorded as part of the asset’s cost and depreciated over the asset’s useful life. Capitalized interest costs for the years ended
December 31, 2017 and 2016 was approximately $10 million and $8 million, respectively, which related to the
construction of the Braves ballpark and mixed-use development during the years ended December 31, 2017 and 2016 and
the construction of SIRIUS XM’s satellites during the year ended December 31, 2017.
Intangible Assets
Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their
estimated residual values, and reviewed for impairment upon certain triggering events. Goodwill and other intangible
assets with indefinite useful lives (collectively, “indefinite lived intangible assets”) are not amortized, but instead are tested
for impairment at least annually. Our annual impairment assessment of our indefinite-lived intangible assets is performed
during the fourth quarter of each year.
In January 2017, the FASB issued new accounting guidance to simplify the measurement of goodwill impairment.
Under the new guidance, an entity no longer performs a hypothetical purchase price allocation to measure goodwill
impairment. Instead, a goodwill impairment is measured using the difference between the carrying value and the fair value
of the reporting unit. The Company early adopted this guidance during the fourth quarter of 2017.
The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely
than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is
necessary to perform the quantitative goodwill impairment test. The accounting guidance also allows entities the option to
bypass the qualitative assessment for any reporting unit in any period and proceed directly to the quantitative impairment
test. The entity may resume performing the qualitative assessment in any subsequent period.
In evaluating goodwill on a qualitative basis, the Company reviews the business performance of each reporting
unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more
likely than not that an indicated impairment exists for any of our reporting units. The Company considers whether there
are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition,
increased costs in doing business, management challenges, the legal environments and how these factors might impact
F-49
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
company specific performance in future periods. As part of the analysis, the Company also considers fair value
determinations for certain reporting units that have been made at various points throughout the current and prior years for
other purposes. If based on the qualitative analysis it is more likely than not that an impairment exists, the Company
performs the quantitative impairment test.
The quantitative goodwill impairment test compares the estimated fair value of a reporting unit to its carrying
value. Developing estimates of fair value requires significant judgments, including making assumptions about appropriate
discount rates, perpetual growth rates, relevant comparable market multiples, public trading prices and the amount and
timing of expected future cash flows. The cash flows employed in Liberty’s valuation analysis are based on management’s
best estimates considering current marketplace factors and risks as well as assumptions of growth rates in future years.
There is no assurance that actual results in the future will approximate these forecasts.
The accounting guidance also permits entities to first perform a qualitative assessment to determine whether it is
more likely than not that an indefinite-lived intangible asset is impaired. The accounting guidance also allows entities the
option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to
the quantitative impairment test. The entity may resume performing the qualitative assessment in any subsequent period.
If the qualitative assessment supports that it is more likely than not that the carrying value of the Company’s indefinite-
lived intangible assets, other than goodwill, exceeds its fair value, then a quantitative assessment is performed. If the
carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount
equal to that excess.
Impairment of Long-lived Assets
The Company periodically reviews the carrying amounts of its property and equipment and its intangible assets
(other than goodwill and indefinite-lived intangibles) to determine whether current events or circumstances indicate that
such carrying amounts may not be recoverable. If the carrying amount of the asset group is greater than the expected
undiscounted cash flows to be generated by such asset group, an impairment adjustment is to be recognized. Such
adjustment is measured by the amount that the carrying value of such asset groups exceeds their fair value. The Company
generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows
using an appropriate discount rate. Considerable management judgment is necessary to estimate the fair value of asset
groups. Accordingly, actual results could vary significantly from such estimates. Asset groups to be disposed of are carried
at the lower of their financial statement carrying amount or fair value less costs to sell.
Noncontrolling Interests
The Company reports noncontrolling interests of subsidiaries within equity in the balance sheet and the amount
of consolidated net income attributable to the parent and to the noncontrolling interest is presented in the statement of
operations. Also, changes in ownership interests in subsidiaries in which the Company maintains a controlling interest are
recorded in equity.
Revenue Recognition
Revenue is recognized as follows:
• Revenue from SIRIUS XM subscribers is recognized as it is realized or realizable and earned. Subscription
fees are recognized as SIRIUS XM’s services are provided. Consumers purchasing or leasing a vehicle with
a factory-installed satellite radio typically receive between a three and twelve month subscription to
SIRIUS XM’s service, certain of which are prepaid. Prepaid subscription fees received from certain
F-50
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
automakers are recorded as deferred revenue and amortized to revenue ratably over the service period which
commences upon retail sale and activation. No revenue is recognized for unpaid trial subscriptions.
• SIRIUS XM recognizes revenue from the sale of advertising as the advertising is transmitted. Agency fees
are calculated based on a stated percentage applied to gross billing revenue for advertising inventory and are
reported as a reduction of advertising revenue. SIRIUS XM pays certain third parties a percentage of
advertising revenue. Advertising revenue is recorded gross of revenue share payments made to certain third
parties, which are recorded to Revenue share and royalties during the period in which the advertising is
transmitted.
• Equipment revenue and royalties from the sale of satellite radios, components and accessories are recognized
upon shipment, net of discounts and rebates. Shipping and handling costs billed to customers are recorded as
revenue. Shipping and handling costs associated with shipping goods to customers are reported as a
component of Cost of subscriber services.
• Certain revenue arrangements contain multiple products, services and right to use assets, such as
SIRIUS XM’s bundled subscription plans. The applicable accounting guidance requires that such multiple
deliverable revenue arrangements be divided into separate units of accounting if the deliverables in the
arrangement meet certain criteria. Consideration is allocated at the inception of the arrangement to all
deliverables based on their relative selling price, which is determined using vendor specific objective
evidence of the selling price of self-pay customers.
• SIRIUS XM also earns revenue from U.S. Music Royalty Fees, which are recorded as revenue and as a
component of Revenue share and royalties expense. Fees received from subscribers for the U.S. Music
Royalty Fee are recorded as deferred revenue and amortized to revenue ratably over the service period.
• SIRIUS XM revenue is reported net of any taxes assessed by a governmental authority that is both imposed
on, and concurrent with, a specific revenue-producing transaction between a seller and a customer in the
consolidated statements of operations.
• Formula 1 derives the majority of its revenue from race promotion, broadcasting and advertising and
sponsorship arrangements. Revenue derived from broadcasting and advertising arrangements is recognized
on an event by event basis, based on the fixed fee within the underlying contractual arrangement. Revenue
from granting rights to host, stage and promote events is recognized upon the occurrence of the event. The
revenue for event-based advertising is also recognized on occurrence of the events to which the underlying
contract relates.
• Formula 1 also earns revenue from teams and other parties for administering the shipment of cars and
equipment to and from the events outside Europe, revenue from the sale of tickets to the Formula One
Paddock Club event-based hospitality, various TV production and post-production activities, and revenue
from other licensing of the Formula One brand. To the extent such revenue relates to services provided or
rights associated with a specific event, the revenue is recognized upon occurrence of the related event.
• Revenue for Braves Holdings ticket sales, broadcasting rights, signage and suites are recognized on a per
game basis during the baseball season based on a pro rata share of total revenue earned during the entire
baseball season to the total number of home games during the season. Prior to 2016, concession revenue was
recognized as commissions were earned from the sale of food and beverage at the stadium in accordance with
agreements with Braves Holdings’ concessions vendors. Beginning in 2016, Braves Holdings brought its
retail operations in-house and engaged a new concessions operator. As a result, concession revenue is
recognized on a per game basis during the baseball season. Major League Baseball (“MLB”) revenue is
earned throughout the year based on an estimate of revenue generated by MLB on behalf of the 30 MLB
F-51
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
clubs. Sources of MLB revenue include distributions from the MLB Central Fund, distributions from MLB
Properties and revenue sharing income, if applicable.
In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new
guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised
goods or services to customers. This new guidance also requires additional disclosure about the nature, amount, timing
and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes
in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued
additional guidance which clarifies principal versus agent considerations, and in April 2016, the FASB issued further
guidance which clarifies the identification of performance obligations and the implementation guidance for licensing. The
updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits
the use of either a full retrospective or modified retrospective transition method. We will adopt this guidance under the
modified retrospective transition method effective as of January 1, 2018.
SIRIUS XM has completed its evaluation of the impact of the new guidance on its revenue streams and expects
the most significant impact to the classification of Revenue share and certain subsidy payments made to automakers
associated with a paid promotional subscription and the impact of the timing of recognition of activation revenue. Under
the new standard, the payments associated with a paid promotional subscription will be treated as a reduction to the
transaction price rather than as an expense. SIRIUS XM expects this change to reduce subscriber revenue by $90 million,
along with a corresponding reduction to revenue share and royalties and subscriber acquisition costs. SIRIUS XM does
not expect this change to have a significant impact to its net earnings. Additionally, within the consolidated balance sheets,
upon adoption, the amount of revenue share and certain subsidy payments made to automakers associated with a paid
promotional subscription will be classified as a liability separate from deferred revenue. SIRIUS XM expects the
adjustment will have an immaterial impact to retained earnings upon adoption.
Formula 1 and Braves Holdings have made significant progress toward completing their evaluation of the
potential impact from adopting the new guidance on their primary revenue streams. Formula 1 is not expecting a material
impact to revenue recognition for its primary revenue streams upon adoption of the new guidance. Braves Holdings expects
a change in the timing of recognition of revenue under its long term contracts upon adoption of the new guidance, which
we expect to result in an immaterial cumulative effect adjustment to retained earnings. The remaining primary revenue
streams for Braves Holdings are not expected to be materially impacted upon adoption of the new guidance. Formula 1
and Braves Holdings continue to finalize the impact of the adoption of this new guidance on their financial statements,
policies, controls and procedures.
Cost of Subscriber Services
Revenue Share
SIRIUS XM shares a portion of its subscription revenue earned from self-pay subscribers and paid promotional
subscribers with certain automakers. The terms of the revenue share agreements vary with each automaker, but are typically
based upon the earned audio revenue as reported or gross billed audio revenue. Such shared revenue is recorded as an
expense and not as a reduction to revenue.
Programming Costs
Programming costs which are for a specified number of events are amortized on an event-by-event basis;
programming costs which are for a specified season or include programming through a dedicated channel are amortized
over the season or period on a straight-line basis. SIRIUS XM allocates a portion of certain programming costs which are
F-52
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
related to sponsorship and marketing activities to selling, general and administrative expense on a straight-line basis over
the term of the agreement.
Cost of Formula 1 Revenue
Cost of Formula 1 revenue consists of team payments and hospitality costs, which are principally related to
catering and other aspects of the production and delivery of the Paddock Club, and circuit rights’ fees payable under various
agreements with race promoters to acquire certain commercial rights at Events, including the right to sell advertising,
hospitality and support race opportunities. Other costs include annual Federation Internationale de l’Automobile regulatory
fees, advertising and sponsorship commissions and those incurred in the provision and sale of freight, travel and logistical
services, F2 and GP3 cars, parts and maintenance services, television production and post-production services, advertising
production services and digital and social media activities. These costs are largely variable in nature and relate directly to
revenue opportunities.
Subscriber Acquisition Costs
Subscriber acquisition costs consist of costs incurred to acquire new subscribers and include hardware subsidies
paid to radio manufacturers, distributors and automakers, including subsidies paid to automakers who include a satellite
radio and a prepaid subscription to SIRIUS XM service in the sale or lease price of a new vehicle; subsidies paid for
chipsets and certain other components used in manufacturing radios; device royalties for certain radios and chipsets;
commissions paid to retailers and automakers as incentives to purchase, install and activate radios; product warranty
obligations; freight; and provisions for inventory allowance attributable to inventory consumed in SIRIUS XM’s
automaker and retail distribution channels. Subscriber acquisition costs do not include advertising costs, loyalty payments
to distributors and dealers of radios and revenue share payments to automakers and retailers of radios.
Subsidies paid to radio manufacturers and automakers are expensed upon installation, shipment, receipt of product
or activation and are included in Subscriber acquisition costs because SIRIUS XM is responsible for providing the service
to the customers. Commissions paid to retailers and automakers are expensed upon either the sale or activation of radios.
Chipsets that are shipped to radio manufacturers and held on consignment are recorded as inventory and expensed as
subscriber acquisition costs when placed into production by radio manufacturers. Costs for chipsets not held on
consignment are expensed as subscriber acquisition costs when the automaker confirms receipt.
Advertising Costs
Advertising expense aggregated $311 million, $230 million and $210 million for the years ended December 31,
2017, 2016 and 2015, respectively. Advertising costs are primarily attributable to costs incurred by SIRIUS XM.
SIRIUS XM’s media-related advertising costs are expensed when advertisements air, and advertising production costs are
expensed as incurred. These costs are reflected in selling, general and administrative expenses in the consolidated
statements of operations.
Stock-Based Compensation
As more fully described in note 14, Liberty has granted to its directors, employees and employees of its
subsidiaries options and restricted stock to purchase shares of Liberty common stock (collectively, “Awards”). The
Company measures the cost of employee services received in exchange for an Award based on the grant-date fair value of
the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the
vesting period of the Award).
F-53
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Included in the accompanying consolidated statements of operations are the following amounts of stock-based
compensation:
Cost of subscriber services:
Programming and content . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer service and billing . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . .
Years ended December 31,
2017
2016
2015
amounts in millions
$
27
4
5
16
178
$ 230
21
4
5
13
107
150
19
5
8
18
154
204
In March 2016, the FASB issued new accounting guidance on share-based payment accounting. The areas for
simplification in this update involve several aspects of the accounting for share-based payment transactions, including the
income tax consequences, classification of awards as either equity or liabilities, forfeiture calculations, and classification
on the statement of cash flows. We early adopted this new guidance in the third quarter of 2016. The Company applied the
new guidance prospectively from January 1, 2016. In accordance with the new guidance, excess tax benefits and tax
deficiencies are recognized as income tax benefit or expense rather than as additional paid-in capital. The Company has
elected to recognize forfeitures as they occur rather than continue to estimate expected forfeitures. In addition, pursuant to
the new guidance, excess tax benefits are classified as an operating activity on the consolidated statements of cash flows.
The recognition of excess tax benefits and deficiencies are applied prospectively. For tax benefits that were not previously
recognized and for adjustments to compensation cost based on actual forfeitures, the Company recorded a cumulative-
effect adjustment in retained earnings as of January 1, 2016 in the amount of $66 million.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying value
amounts and income tax bases of assets and liabilities and the expected benefits of utilizing net operating loss and tax
credit carryforwards. The deferred tax assets and liabilities are calculated using enacted tax rates in effect for each taxing
jurisdiction in which the Company operates for the year in which those temporary differences are expected to be recovered
or settled. Net deferred tax assets are then reduced by a valuation allowance if the Company believes it more likely than
not such net deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of an enacted change
in tax rates is recognized in income in the period that includes the enactment date.
When the tax law requires interest to be paid on an underpayment of income taxes, the Company recognizes
interest expense from the first period the interest would begin accruing according to the relevant tax law. Such interest
expense is included in interest expense in the accompanying consolidated statements of operations. Any accrual of penalties
related to underpayment of income taxes on uncertain tax positions is included in other income (expense) in the
accompanying consolidated statements of operations.
Earnings Attributable to Liberty Stockholders Per Common Share
Basic earnings (loss) per common share (“EPS”) is computed by dividing net earnings (loss) by the weighted
average number of common shares that were outstanding for the period at the Company. Diluted EPS presents the dilutive
F-54
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods
presented.
As discussed in note 2, on April 15, 2016, the Company completed a recapitalization of its common stock into
three new tracking stock groups, one designated as the Liberty SiriusXM common stock, one designated as the Liberty
Braves common stock and one designated as the Liberty Media common stock. As further discussed in note 2, the Liberty
Media common stock was renamed Liberty Formula One common stock on January 24, 2017 shortly after the Second
Closing. The operating results prior to the Recapitalization are attributed to Liberty Media Corporation stockholders in the
aggregate, and the operating results subsequent to the Recapitalization are attributed to the respective tracking stock groups.
Excluded from diluted EPS for the period subsequent to the Recapitalization through December 31, 2016 are
approximately 21 million potentially dilutive shares of Series A Liberty SiriusXM common stock, 2 million potentially
dilutive shares of Series A Liberty Braves common stock and 5 million potentially dilutive shares of Series A Liberty
Formula One common stock, primarily due to warrants issued in connection with the Bond Hedge Transaction (note 10),
because their inclusion would be antidilutive. The Amended Warrant Transactions (as defined and discussed in note 10)
may have a dilutive effect with respect to the shares comprising the Securities Basket underlying the warrants to the extent
that the settlement price exceeds the strike price of the warrants, and the warrants are settled in shares comprising such
Securities Basket. The warrants and any potential future settlement have been attributed to the Formula One Group.
Series A, Series B and Series C Liberty Media Corporation Common Stock
The basic and diluted EPS calculation is based on the following weighted average shares outstanding (“WASO”)
of Liberty’s common stock. Excluded from diluted EPS for the periods from January 1, 2016 through the Recapitalization
and for the year ended December 31, 2015 are 23 million and 22 million potential common shares, respectively, primarily
due to warrants issued in connection with the Bond Hedge Transaction (as defined and discussed in note 10) because their
inclusion would be anti-dilutive.
Basic WASO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potentially dilutive shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted WASO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 1, 2016
through
April 15, 2016
Year ended
December 31, 2015
number of shares in millions
335
2
337
338
2
340
F-55
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Series A, Series B and Series C Liberty SiriusXM Common Stock
The basic and diluted EPS calculations are based on the following weighted average outstanding shares of
common stock. Excluded from diluted EPS for the year ended December 31, 2017 are 22 million potentially dilutive shares
of Liberty SiriusXM common stock, because their inclusion would be antidilutive.
Basic WASO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potentially dilutive shares . . . . . . . . . . . . . . . . . . . . . . . .
Diluted WASO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series A, Series B and Series C Liberty Braves Common Stock
Year ended
December 31, 2017
April 18, 2016
through
December 31, 2016
number of shares in millions
336
4
340
335
2
337
The basic and diluted EPS calculations are based on the following weighted average outstanding shares of
common stock. Excluded from diluted EPS for the year ended December 31, 2017 are 2 million potentially dilutive shares
of Liberty Braves common stock, because their inclusion would be antidilutive.
Basic WASO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potentially dilutive shares . . . . . . . . . . . . . . . . . . . . . . . .
Diluted WASO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended
December 31, 2017
(a)
April 18, 2016
through
December 31, 2016
(a)(b)(c)
number of shares in millions
49
10
59
46
9
55
(a) Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are
reported since the result would be antidilutive.
(b) As discussed in note 2, subsequent to the Recapitalization, Liberty distributed subscription rights to holders of Liberty
Braves common stock, which were priced at a discount to the market value, to acquire additional shares of Liberty
Braves common stock. The rights offering, because of the discount, is considered a stock dividend which requires
retroactive treatment for prior periods for the weighted average shares outstanding.
(c) As discussed in note 2, following the Recapitalization and Series C Liberty Braves common stock rights offering, the
number of notional shares representing the Formula One Group’s intergroup interest in the Braves Group was adjusted
to 9,084,940 shares. The intergroup interest is a quasi-equity interest which is not represented by outstanding shares
of common stock; rather, the Formula One Group has an attributed value in the Braves Group which is generally stated
in terms of a number of shares of stock issuable to the Formula One Group with respect to its interest in the Braves
Group. Each reporting period, the notional shares representing the intergroup interest are marked to fair value. As the
notional shares underlying the intergroup interest are not represented by outstanding shares of common stock, such
shares have not been officially designated Series A, B or C Liberty Braves common stock. However, Liberty has
assumed that the notional shares (if and when issued) would be comprised of Series C Liberty Braves common stock
in order to not dilute voting percentages. Therefore, the market price of Series C Liberty Braves common stock is used
for the quarterly mark-to-market adjustment through the unaudited attributed consolidated statements of operations.
The notional shares representing the intergroup interest have no impact on the basic earnings per share weighted
average number of shares outstanding. However, in periods where the Braves Group has net earnings, the notional
F-56
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
shares representing the intergroup interest are included in the diluted earnings per share WASO as if the shares had
been issued and outstanding during the period. In periods where the Braves Group has net earnings, an adjustment is
also made to the numerator in the diluted earnings per share calculation for the unrealized gain or loss incurred from
marking the intergroup interest to fair value during the period as follows:
Year ended
December 31, 2017
(a)
April 18, 2016
through
December 31, 2016
(a)
amounts in millions
Basic earnings (loss) attributable to Liberty Braves
shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Unrealized (gain) loss on the intergroup interest . . . .
Diluted earnings (loss) attributable to Liberty Braves
shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(25)
15
(10)
(30)
27
(3)
(a) Unrealized gains on the intergroup interest are excluded from the computation of diluted EPS during periods
in which net losses attributable to the Braves Group are reported since the gain would be antidilutive.
Series A, Series B and Series C Liberty Formula One Common Stock
The basic and diluted EPS calculations are based on the following weighted average outstanding shares of
common stock. Excluded from diluted EPS for the year ended December 31, 2017 are 5 million potentially dilutive shares
of Liberty Formula One common stock, because their inclusion would be antidilutive.
Basic WASO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potentially dilutive shares . . . . . . . . . . . . . . . . . . . . . . .
Diluted WASO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclasses and Adjustments
Year ended
December 31, 2017
April 18, 2016
through
December 31, 2016
number of shares in millions
207
4
211
84
1
85
Certain prior period amounts have been reclassified for comparability with the current year presentation.
Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The
Company considers (i) recurring and nonrecurring fair value measurements, (ii) accounting for income taxes,
(iii) assessments of other-than-temporary declines in fair value of its investments and (iv) determination of the useful life
of SIRIUS XM’s broadcast/transmission system to be its most significant estimates.
The Company holds investments that are accounted for using the equity method. The Company does not control
the decision making process or business management practices of these affiliates. Accordingly, the Company relies on
management of these affiliates to provide it with accurate financial information prepared in accordance with GAAP that
F-57
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
the Company uses in the application of the equity method. In addition, the Company relies on audit reports that are provided
by the affiliates’ independent auditors on the financial statements of such affiliates. The Company is not aware, however,
of any errors in or possible misstatements of the financial information provided by its equity affiliates that would have a
material effect on the Company’s consolidated financial statements.
Recent Accounting Pronouncements
In February 2016, the FASB issued new accounting guidance on lease accounting. This guidance requires a
company to recognize lease assets and lease liabilities arising from operating leases in the statement of financial position.
Additionally, the criteria for classifying a lease as a finance lease versus an operating lease are substantially the same as
the previous guidance. The amendments in this update are effective for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years, and early adoption is permitted. Companies are required to use a
modified retrospective approach to adopt this guidance. The Company has not yet determined the effect of the standard on
its ongoing financial reporting. The Company is currently working with its consolidated subsidiaries to evaluate the impact
of the adoption of this new guidance on our consolidated financial statements, including identifying the population of
leases, evaluating technology solutions and collecting lease data.
In October 2016, the FASB issued new accounting guidance on income tax accounting associated with intra-entity
transfers of assets other than inventory. This accounting update, which is part of the FASB’s simplification initiative, is
intended to reduce diversity in practice and the complexity of tax accounting, particularly for those transfers involving
intellectual property. This new guidance requires an entity to recognize the income tax consequences of an intra-entity
transfer of an asset other than inventory when the transfer occurs. The guidance is effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. Upon adoption, an
entity may apply the new guidance only on a modified retrospective basis through a cumulative-effect adjustment directly
to retained earnings as of the beginning of the period of adoption. The Company does not expect this new guidance will
have a material impact to its consolidated financial statements or related disclosures.
(4) Supplemental Disclosures to Consolidated Statements of Cash Flows
Years ended December 31,
2017
2016
2015
amounts in millions
Cash paid for acquisitions:
Fair value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Intangibles not subject to amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangibles subject to amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of equity consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(484)
4,039
5,499
(5,035)
(475)
(1,790)
Cash paid for acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,754
—
—
—
—
—
—
—
Stock repurchased by subsidiary not yet settled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
17
23
—
—
—
—
—
—
—
24
Cash paid for interest, net of amounts capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
561
327
295
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
56
69
3
F-58
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
(5) Acquisitions
Formula 1
On September 7, 2016, Liberty, through its indirect wholly owned subsidiary Liberty GR Cayman Acquisition
Company, entered into two definitive stock purchase agreements relating to the acquisition of Delta Topco, the parent
company of Formula 1, a global motorsports business, from a consortium of sellers led by CVC Capital Partners (“CVC”).
The transactions contemplated by the first purchase agreement were completed on September 7, 2016 and provided for
Liberty’s acquisition of slightly less than a 20% minority stake in Formula 1 on an undiluted basis for $746 million, funded
entirely in cash (which is equal to $821 million in consideration less a $75 million holdback that was repaid by Liberty to
selling stockholders upon completion of the Second Closing). On October 27, 2016, under the terms of the first purchase
agreement, Liberty acquired an additional incremental equity interest of Delta Topco, maintaining Liberty’s investment in
Delta Topco on an undiluted basis and increasing slightly to 19.1% on a fully diluted basis. On January 23, 2017, Liberty
acquired 100% of the fully diluted equity interests of Delta Topco, other than a nominal number of shares held by certain
Formula 1 teams, in a second closing under the second purchase agreement (and following the unwind of the first purchase
agreement). Prior to the Second Closing, CVC continued to be the controlling shareholder of Formula 1, and Liberty did
not have any voting interests or board representation in Formula 1. As a result, Liberty concluded that it did not have
significant influence over Formula 1, and therefore our initial investment in Formula 1 was accounted for as a cost
investment until the completion of the Second Closing, at which time we began consolidating Formula 1.
The transaction price for the acquisition represents an enterprise value for Formula 1 of approximately $8.0 billion
and an equity value of approximately $4.4 billion, calculated at the time of the first closing. The total consideration at the
time of closing was $4.7 billion, comprised of $3.05 billion of cash (including the investments made under the first
purchase agreement during 2016) and approximately $1.6 billion of non-cash consideration represented by approximately
56 million newly issued shares of Series C Liberty Formula One common stock.
In connection with the transaction, Liberty entered into a $500 million margin loan on November 8, 2016, secured
by shares of Live Nation and other public equity securities held by Liberty (the ‘‘Live Nation Margin Loan’’). No amounts
were drawn on the Live Nation Margin Loan at December 31, 2016. Liberty drew approximately $350 million to use for
the purchase of Formula 1, on January 23, 2017. See note 10 for additional discussion regarding the Live Nation Margin
Loan.
At the Second Closing, the Company issued 62 million new shares of Series C Liberty Formula One common
stock, which were subject to market co-ordination and lock-up agreements, to certain third party investors at a price per
share of $25.00. As a result, the stock component of the consideration payable to the selling shareholders in the Formula 1
acquisition was decreased by 62 million shares, and the cash component of the consideration payable to the selling
shareholders in the Formula 1 acquisition was increased by $1.55 billion.
Also concurrently with the Second Closing, the Company used a portion of the net proceeds of its $450 million
cash offering of 1% Cash convertible Notes due 2023, as discussed in note 10, to increase the cash consideration payable
to the selling shareholders by approximately $400 million. The additional 19 million shares of Series C Liberty Formula
One common stock that would otherwise have been issued to the selling shareholders based on the per share purchase price
of $21.26 were held in reserve by the Company for possible sale to the Formula 1 teams, until such opportunity expired in
July of 2017.
In connection with the Second Closing, Delta Topco issued $351 million subordinated exchangeable notes, upon
the conversion of certain outstanding Delta Topco loan notes, that bear interest at 2% per annum and mature in July 2019,
exchangeable into cash or newly issued shares of Series C Liberty Formula One common stock (“Exchangeable Notes”).
See note 10 for additional discussion of this debt instrument.
F-59
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
The final acquisition price allocation for Formula 1 is as follows:
Ownership interest held prior to the Second Closing . . . . . . . . . . .
Controlling interest acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total acquisition price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets subject to amortization . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
759
3,939
4,698
644
136
3,956
5,484
153
(141)
(4,528)
(516)
(490)
4,698
Goodwill is calculated as the excess of the consideration transferred over the identifiable net assets acquired and
represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for
separate recognition, including assembled workforce, value associated with future customers, continued innovation and
noncontractual relationships. Formula 1 amortizable intangible assets were comprised of an agreement with the Fédération
Internationale de l’Automobile (the “FIA,” and the agreement, the “FIA Agreement”) ($3.6 billion with a remaining useful
life of approximately 35 years) and customer relationships of $1.9 billion with a weighted average remaining life of
approximately 11.5 years. The FIA owns the World Championship and has granted Formula 1 the exclusive commercial
rights to the World Championship until the end of 2110. During the fourth quarter of 2017, the preliminary purchase price
allocation was adjusted, resulting in increases of $22 million to other assets and $11 million to other liabilities assumed
and decreases of $12 million to goodwill and $1 million to deferred tax liabilities. None of the acquired goodwill is
expected to be deductible for tax purposes. As of December 31, 2017, the valuation related to the acquisition of a
controlling interest in Formula 1 and the acquisition price allocation are final.
Included in net earnings (loss) for the year ended December 31, 2017 is $261 million related to Formula 1’s
operations since the date of acquisition.
The unaudited pro forma revenue and net earnings of Liberty, prepared utilizing the historical financial statements
of Formula 1, giving effect to acquisition accounting related adjustments made at the time of acquisition, as if the
acquisition of Formula 1 discussed above occurred on January 1, 2016, are as follows:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) attributable to Liberty stockholders . . . . .
$
$
$
7,595
1,874
1,338
7,072
743
499
Years ended
December 31,
2017
2016
amounts in millions
F-60
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
The pro forma results include adjustments primarily related to the amortization of acquired intangible assets. The
pro forma information is not representative of the Company’s future results of operations nor does it reflect what the
Company’s results of operations would have been if the acquisition of Formula 1 had occurred previously and the Company
consolidated Formula 1 during the periods presented.
(6) Assets and Liabilities Measured at Fair Value
For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs
to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active
markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2
inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability,
either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have
any recurring assets or liabilities measured at fair value that would be considered Level 3.
Liberty’s assets and liabilities measured at fair value are as follows:
December 31, 2017
December 31, 2016
Description
Total
Quoted prices
in active markets
for identical assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Quoted prices
in active markets
for identical assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Total
amounts in millions
804
Cash equivalents . . . . . . . $
Available-for-sale
securities . . . . . . . . . . . . . . $ 1,047
Financial instrument
369
assets . . . . . . . . . . . . . . . . . $
Debt . . . . . . . . . . . . . . . . . $ 2,115
804
—
289
289
467
580
489
489
—
—
19
—
350
2,115
286
1,546
16
—
270
1,546
The majority of Liberty’s Level 2 financial instruments are debt related instruments and derivative instruments.
In addition, SIRIUS XM’s investment in Pandora Media, Inc. (“Pandora”) is classified as Level 2. See note 7 for
information related to the investment in Pandora. The Company notes that these assets are not always traded publicly or
not considered to be traded on “active markets,” as defined in GAAP. The fair values for such instruments are derived from
a typical model using observable market data as the significant inputs or a trading price of a similar asset or liability is
utilized. The fair value of debt related instruments are based on quoted market prices but not considered to be traded on
“active markets,” as defined by GAAP. Accordingly, those available-for-sale securities, financial instruments and debt or
debt related instruments are reported in the foregoing table as Level 2 fair value. The financial instrument assets included
in the table above are included in the Other assets line item in the consolidated balance sheets.
F-61
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Realized and Unrealized Gains (Losses) on Financial Instruments
Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the
following (amounts in millions):
Years ended December 31,
2016 2015
2017
Fair Value Option Securities (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt measured at fair value (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of bond hedges (c) . . . . . . . . . . . . . . . . . . . . . . .
Other derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(36)
(126)
72
2
(88)
$
112
(113)
37
1
37
(151)
(5)
23
(7)
(140)
(a) Changes in unrealized gains (losses) on fair value option securities include SIRIUS XM’s investment in Pandora’s
Series A Convertible Preferred Stock. See note 7 for information related to the investment in Pandora.
(b) Changes in unrealized gains (losses) on debt measured at fair value are due to market factors primarily driven by
changes in the fair value of the underlying shares into which the debt is exchangeable.
(c) Contemporaneously with the issuance of the 1.375% Cash Convertible Notes due 2023, Liberty entered into privately
negotiated cash convertible note hedges, which are expected to offset potential cash payments Liberty would be
required to make in excess of the principal amount of the convertible notes, upon conversion of the notes. The bond
hedges are marked to market based on the trading price of underlying Series A Liberty SiriusXM, Liberty Braves and
Liberty Formula One securities and other observable market data as the significant inputs (Level 2). See note 10 for
additional discussion of the convertible notes and the bond hedges.
(7) Investments in Available-for-Sale Securities and Other Cost Investments
All marketable equity and debt securities held by the Company are classified as available-for-sale (“AFS”) and
are carried at fair value generally based on quoted market prices. GAAP permits entities to choose to measure many
financial instruments, such as AFS securities, and certain other items at fair value and to recognize the changes in fair value
of such instruments in the entity’s statement of operations. The Company previously had entered into economic hedges for
certain of its AFS securities (although such instruments were not accounted for as fair value hedges by the Company).
Changes in the fair value of those economic hedges were reflected in the Company’s statement of operations as unrealized
gains (losses). In order to better match the changes in fair value of the subject AFS securities and the changes in fair value
of the corresponding economic hedges in the Company’s financial statements, the Company elected the fair value option
for certain of its AFS securities (“Fair Value Option Securities”). Accordingly, changes in the fair value of Fair Value
Option Securities, as determined by quoted market prices, are reported in realized and unrealized gains (losses) on financial
instruments in the accompanying consolidated statements of operations.
F-62
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Investments in AFS securities, including Fair Value Option Securities separately aggregated, and other cost
investments are summarized as follows:
December 31, 2017 December 31, 2016
amounts in millions
Liberty SiriusXM Group
Fair Value Option Securities
Pandora (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total attributed Liberty SiriusXM Group . . . . . . . . . . . . . . .
$
Braves Group
Other AFS and cost investments . . . . . . . . . . . . . . . . . . . . . . . .
Total attributed Braves Group . . . . . . . . . . . . . . . . . . . . . . . . .
Formula One Group
Fair Value Option Securities
Time Warner (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Fair Value Option Securities . . . . . . . . . . . . . . . . . . . .
AFS and cost investments
Formula 1 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other AFS and cost investments . . . . . . . . . . . . . . . . . . . . . . .
Total AFS and cost investments . . . . . . . . . . . . . . . . . . . . . .
Total attributed Formula One Group . . . . . . . . . . . . . . . . . . .
480
100
580
8
8
389
78
467
—
59
59
526
Consolidated Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,114
—
—
—
8
8
411
78
489
759
53
812
1,301
1,309
(a) See below for details regarding SIRIUS XM’s investment in Pandora.
(b) See note 10 for details regarding the number and fair value of shares pledged as collateral pursuant to the Braves
Holdings mixed-use development facility as of December 31, 2017.
(c) See note 5 for details regarding the Company’s acquisition of Formula 1.
Pandora
On September 22, 2017, a subsidiary of SIRIUS XM completed a $480 million investment in newly issued
Series A convertible preferred stock of Pandora (the “Series A Preferred Stock”). Pandora operates an internet-based music
discovery platform, offering a personalized experience for listeners. The Series A preferred stock, including accrued but
unpaid dividends, represents an approximate 19% interest in Pandora’s currently outstanding common stock and an
approximate 16% interest on an as-converted basis.
The Series A Preferred Stock is convertible at the option of the holders at any time into shares of common stock
of Pandora (“Pandora Common Stock”) at an initial conversion price of $10.50 per share of Pandora Common Stock and
an initial conversion rate of 95.2381 shares of Pandora Common Stock per share of Series A Preferred Stock, subject to
certain customary anti-dilution adjustments. Holders of the Series A Preferred Stock are entitled to a cumulative dividend
at the rate of 6.0% per annum, payable quarterly in arrears, if and when declared. Any conversion of Series A Preferred
Stock may be settled by Pandora, at its option, in shares of Pandora Common Stock, cash or any combination thereof.
F-63
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
However, unless and until Pandora’s stockholders have approved the issuance of greater than 19.99% of the outstanding
Pandora Common Stock, the Series A Preferred Stock may not be converted into more than 19.99% of Pandora’s
outstanding Pandora Common Stock as of June 9, 2017.
The investment includes a mandatory redemption feature on any date from and after September 22, 2022 and
therefore the financial instrument has been treated as a debt security. As the investment includes a conversion option,
SIRIUS XM has elected to account for this investment under the fair value option. Any gains (losses) associated with the
change in fair value will be recognized in realized and unrealized gains (losses) on financial instruments, net in the
consolidated statements of operations. A $17 million unrealized loss was recognized during the year ended December 31,
2017 on the investment in Pandora, including transaction costs.
Pursuant to an Investment Agreement with Pandora, SIRIUS XM has appointed three of its senior executives or
members of its Board of Directors to Pandora’s Board of Directors, one of whom serves as the Chairman of Pandora’s
Board of Directors. SIRIUS XM’s right to designate directors will fall away once SIRIUS XM and its affiliates fail to
beneficially own shares of Series A Preferred Stock and/or Pandora Common Stock issued upon conversion thereof equal
to (on an as-converted basis) at least 50% of the number of shares of Pandora Common Stock issuable upon conversion of
the Series A Preferred Stock purchased under the Investment Agreement. Following the earlier to occur of
(i) September 22, 2019 and (ii) the date on which SIRIUS XM and its affiliates fail to beneficially own shares of Series A
Preferred Stock and/or Pandora Common Stock that were issued upon conversion of Series A Preferred Stock equal to (on
an as-converted basis) at least 75% of the number of shares of Pandora Common Stock issuable upon conversion of the
Series A Preferred Stock purchased under the Investment Agreement, SIRIUS XM has the right to designate only two
directors.
Unrealized Holding Gains and Losses recorded in Accumulated other comprehensive earnings (loss)
There were no unrealized holding gains or losses related to investments in AFS securities at December 31, 2017
or 2016.
F-64
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
(8) Investments in Affiliates Accounted for Using the Equity Method
Liberty has various investments accounted for using the equity method. The following table includes the
Company’s carrying amount and percentage ownership and market value (Level 1) of the more significant investments in
affiliates at December 31, 2017, and the carrying amount at December 31, 2016:
Liberty SiriusXM Group
SIRIUS XM Canada . . . . . . . . . . . .
Total Liberty SiriusXM Group . .
Braves Group
Other . . . . . . . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . .
Formula One Group
Live Nation (a) . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . .
Consolidated Liberty . . . . . . . . . . . .
December 31, 2017
Percentage Fair Value
(Level 1)
ownership
Carrying
amount
December 31, 2016
Carrying
amount
dollar amounts in millions
70% $
NA $
NA
NA
34% $
various
2,965
NA
$
672
672
145
145
756
177
933
1,750
164
164
61
61
731
161
892
1,117
(a) See note 10 for details regarding the number and value of shares pledged as collateral pursuant to the Live Nation
Margin Loan as of December 31, 2017.
F-65
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
The following table presents the Company’s share of earnings (losses) of affiliates:
Years ended December 31,
2017
2016 2015
amounts in millions
Liberty SiriusXM Group
SIRIUS XM Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Total Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
29
13
13
(1)
(1)
Braves Group
Other (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78
78
9
9
9
9
Formula One Group
Live Nation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(18)
15
(3)
104
(12)
4
(8)
14
(27)
(21)
(48)
(40)
(a) During the year ended December 31, 2017, an equity method affiliate of Braves Holdings sold a controlling interest
in a subsidiary, resulting in Braves Holdings recording its portion of the gain of $69 million.
SIRIUS XM Canada
In the acquisition of SIRIUS XM on January 18, 2013, Liberty acquired an interest in Sirius XM Canada
Holdings, Inc. (“SIRIUS XM Canada”) which SIRIUS XM accounts for as an equity method affiliate. Liberty recognized
the investment at fair value, based on the market price per share (level 1), on the date of acquisition.
On May 25, 2017, SIRIUS XM completed a recapitalization of SIRIUS XM Canada, which is now a privately
held corporation.
SIRIUS XM now holds a 70% equity interest and 33% voting interest in SIRIUS XM Canada, with the remainder
of the voting power and equity interest held by two of SIRIUS XM Canada’s previous shareholders. The total consideration
from SIRIUS XM to SIRIUS XM Canada, excluding transaction costs, during the year ended December 31, 2017 was
$309 million, which included $130 million in cash and SIRIUS XM issued 35 million shares of its common stock with an
aggregate value of $179 million to the holders of the shares of SIRIUS XM Canada acquired in the transaction.
SIRIUS XM received common stock, non-voting common stock and preferred stock of SIRIUS XM Canada. SIRIUS XM
owns approximately 591 million shares of preferred stock of SIRIUS XM Canada, which has a liquidation preference of
one Canadian dollar per share. SIRIUS XM Canada is accounted for as an equity method investment as SIRIUS XM does
not have the ability to direct the most significant activities that impact SIRIUS XM Canada’s economic performance.
SIRIUS XM also made a contribution in the form of a loan to SIRIUS XM Canada in the aggregate amount of
$131 million on May 25, 2017. The loan is denominated in Canadian dollars and is considered a long-term investment
with any unrealized gains or losses reported within Accumulated other comprehensive (loss) income. Such loan has a term
of fifteen years, bears interest at a rate of 7.62% per annum and includes customary covenants and events of default,
including an event of default relating to SIRIUS XM Canada’s failure to maintain specified leverage ratios. In addition,
the terms of the loan require SIRIUS XM Canada to prepay a portion of the outstanding principal amount of the loan within
F-66
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
sixty days of the end of each fiscal year in an amount equal to any cash on hand in excess of C$10 million at the last day
of the financial year if all target dividends have been paid in full.
SIRIUS XM also entered into a Services Agreement and an Advisory Services Agreement with SIRIUS XM
Canada. Each agreement has a thirty year term. Pursuant to the Services Agreement, SIRIUS XM Canada will pay
SIRIUS XM 25% of its gross revenue on a monthly basis through December 31, 2021 and 30% of its gross revenue on a
monthly basis thereafter. Pursuant to the Advisory Services Agreement, SIRIUS XM Canada will pay SIRIUS XM 5% of
its gross revenue on a monthly basis. These agreements supersede and replace the existing agreements between
SIRIUS XM Canada and its predecessors and SIRIUS XM.
Under the legacy agreement, as of December 31, 2016, SIRIUS XM’s related party current assets balance
primarily consisted of activation fees and streaming and chipset costs for which it was reimbursed. SIRIUS XM has
approximately $10 million and $6 million in related party current assets as of December 31, 2017 and 2016, respectively.
As of December 31, 2017, the related party current asset balance included amounts due under the new services
arrangements and certain amounts due related to transactions outside of the scope of the new services arrangements. At
December 31, 2017 and 2016, SIRIUS XM has approximately $10 million and $11 million in related party liabilities,
respectively, related to the legacy agreements with SIRIUS XM Canada which are recorded in current and noncurrent other
liabilities in the Company’s consolidated balance sheets. SIRIUS XM recorded approximately $87 million, $46 million
and $56 million in revenue for the years ended December 31, 2017, 2016 and 2015, respectively, associated with these
various agreements in the Other revenue line in the consolidated statements of operations. SIRIUS XM Canada declared
and paid dividends to SIRIUS XM of $4 million, $8 million and $16 million during the years ended December 31, 2017,
2016 and 2015, respectively. These dividends were first recorded as a reduction to SIRIUS XM’s investment balance in
Sirius XM Canada to the extent a balance existed and then as Other income for the remaining portion.
(9) Goodwill and Other Intangible Assets
Goodwill
Changes in the carrying amount of goodwill are as follows:
SIRIUS XM
Formula 1
Other
Total
Balance at January 1, 2016 . . . . . . . . . . . . . . . . . . . . . $
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2016 . . . . . . . . . . . . . . . . . .
Acquisitions (a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2017 . . . . . . . . . . . . . . . . . . $
14,165
—
14,165
82
14,247
amounts in millions
—
—
—
3,956
3,956
180
—
180
—
180
14,345
—
14,345
4,038
18,383
(a) On April 18, 2017, SIRIUS XM acquired Automatic Labs Inc., a connected vehicle device and mobile application
company, for an aggregate purchase price of approximately $108 million, net of cash and restricted cash acquired. The
excess purchase price over identifiable net assets of $82 million was recorded to goodwill.
(b) See note 5 for details regarding the Formula 1 acquisition.
Other Intangible Assets Not Subject to Amortization
Other intangible assets not subject to amortization, not separately disclosed, are tradenames ($931 million and
$930 million) at December 31, 2017 and 2016 and franchise rights owned by Braves Holdings ($143 million) as of
F-67
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
December 31, 2017 and 2016. We identified these assets as indefinite life intangible assets after considering the expected
use of the assets, the regulatory and economic environment within which they are used and the effects of obsolescence on
their use. SIRIUS XM’s Federal Communications Commission (“FCC”) licenses are currently scheduled to expire in 2018,
2021, 2022 and 2025. Prior to expiration, SIRIUS XM is required to apply for a renewal of its FCC licenses. The renewal
and extension of its licenses is reasonably certain at minimal cost, which is expensed as incurred. Each of the FCC licenses
authorizes SIRIUS XM to use the broadcast spectrum, which is a renewable, reusable resource that does not deplete or
exhaust over time.
Intangible Assets Subject to Amortization
Intangible assets subject to amortization are comprised of the following:
December 31, 2017
December 31, 2016
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
Gross
Net
carrying Accumulated carrying
amortization amount
amount
FIA Agreement . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . .
Licensing agreements . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,684
330
798
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,442
$ 3,630
(157)
(501)
(138)
(515)
(1,311)
amounts in millions
3,473
2,183
192
283
6,131
—
830
316
686
1,832
—
(228)
(109)
(423)
(760)
—
602
207
263
1,072
Customer relationships are amortized over 10-15 years and licensing agreements are amortized over 15 years.
Amortization expense was $594 million, $168 million and $155 million for the years ended December 31, 2017, 2016 and
2015, respectively. Based on its amortizable intangible assets as of December 31, 2017, Liberty expects that amortization
expense will be as follows for the next five years (amounts in millions):
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
611
$ 598
$ 502
$ 469
$ 433
F-68
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
(10) Debt
Debt is summarized as follows:
Liberty SiriusXM Group
Corporate level notes and loans:
Outstanding
Principal
December 31, 2017
Carrying value
December 31, December 31,
2017
2016
Margin loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
750
750
250
Subsidiary notes and loans:
SIRIUS XM 5.75% Senior Notes due 2021 . . . . . . . . . . . . . . . . . . . . . . . . .
SIRIUS XM 5.25% Senior Secured Notes due 2022 . . . . . . . . . . . . . . . . . .
SIRIUS XM 4.25% Senior Notes due 2020 . . . . . . . . . . . . . . . . . . . . . . . . .
SIRIUS XM 3.875% Senior Notes due 2022 . . . . . . . . . . . . . . . . . . . . . . . .
SIRIUS XM 4.625% Senior Notes due 2023 . . . . . . . . . . . . . . . . . . . . . . . .
SIRIUS XM 6% Senior Notes due 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIRIUS XM 5.375% Senior Notes due 2025 . . . . . . . . . . . . . . . . . . . . . . . .
SIRIUS XM 5.375% Senior Notes due 2026 . . . . . . . . . . . . . . . . . . . . . . . .
SIRIUS XM 5.0% Senior Notes due 2027 . . . . . . . . . . . . . . . . . . . . . . . . . .
SIRIUS XM Senior Secured Revolving Credit Facility . . . . . . . . . . . . . . . .
SIRIUS XM leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred financing costs
—
—
—
1,000
500
1,500
1,000
1,000
1,500
300
11
Total Liberty SiriusXM Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,561
Braves Group
Subsidiary notes and loans:
—
—
—
992
497
1,488
991
990
1,486
300
11
(9)
7,496
Notes and loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
667
667
667
(5)
662
Formula One Group
Corporate level notes and loans:
1.375% Cash Convertible Notes due 2023 . . . . . . . . . . . . . . . . . . . . . . . . .
1% Cash Convertible Notes due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.25% Exchangeable Senior Debentures due 2046 . . . . . . . . . . . . . . . . . .
Live Nation Margin Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsidiary notes and loans:
Bank Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less debt classified as current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,000
450
445
350
35
3,302
5,582
13,810
$
1,146
505
464
350
35
3,314
(18)
5,796
13,954
(768)
13,186
596
405
497
—
496
1,487
990
989
—
390
14
(7)
6,107
338
(10)
328
1,076
—
470
—
37
—
—
1,583
8,018
(5)
8,013
1.375% Cash Convertible Senior Notes due 2023
On October 17, 2013 Liberty issued $1 billion aggregate principal amount of 1.375% Cash Convertible Senior
Notes due 2023 (“Convertible Notes”). The Convertible Notes will mature on October 15, 2023 unless earlier repurchased
F-69
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
by us or converted. Interest on the Convertible Notes is payable semi-annually in arrears on April 15 and October 15 of
each year at a rate of 1.375% per annum. All conversion of the Convertible Notes will be settled solely in cash, and not
through the delivery of any securities. Prior to the Recapitalization, the conversion rate for the Convertible Notes was
21.0859 shares of Series A Liberty Media Corporation common stock per $1,000 principal amount of Convertible Notes
and an adjusted conversion price of $47.43 per share of Series A Liberty Media Corporation common stock.
As a result of the Recapitalization, as discussed in note 2, the Convertible Notes are convertible into cash based
on the Securities Basket. The supplemental indenture entered into on April 15, 2016 in connection with the Recapitalization
amends the conversion, adjustment and other provisions of the indenture to give effect to the Recapitalization and provides
that the conversion consideration due upon conversion of any Convertible Note shall be determined as if references in the
indenture to one share of Series A Liberty Media Corporation common stock were instead a reference to the Securities
Basket, initially consisting of 0.10 of a share of Series A Liberty Braves common stock, 1.0 share of Series A Liberty
SiriusXM common stock and 0.25 of a share of Series A Liberty Formula One common stock. The Series A Liberty Braves
common stock component of the Securities Basket was adjusted to 0.1087 pursuant to anti-dilution adjustments arising out
of the distribution of subscription rights to purchase shares of Series C Liberty Braves common stock made to all holders
of Liberty Braves common stock.
Holders of the Convertible Notes may convert their notes at their option at any time prior to the close of business
on the second business day immediately preceding the maturity date of the notes under certain circumstances. Liberty has
elected to account for this instrument using the fair value option. Accordingly, changes in the fair value of this instrument
are recognized as unrealized gains (losses) in the statements of operations. As of December 31, 2017, the Convertible
Notes are classified as a long term liability in the consolidated balance sheets, as the conversion conditions have not been
met as of such date.
Additionally, contemporaneously with the issuance of the Convertible Notes, Liberty entered into the Bond Hedge
Transaction. The Bond Hedge Transaction is expected to offset potential cash payments Liberty would be required to make
in excess of the principal amount of the Convertible Notes, upon conversion of the notes in the event that the volume-
weighted average price per share of the Series A Liberty Media Corporation common stock, as measured under the cash
convertible note hedge transactions on each trading day of the relevant cash settlement averaging period or other relevant
valuation period, was greater than the strike price of Series A Liberty Media Corporation common stock, which
corresponded to the conversion price of the Convertible Notes. In connection with the Recapitalization and the entry into
the supplemental indenture on April 15, 2016, Liberty entered into amendments to the Bond Hedge Transaction with each
of the counterparties to reflect the adjustments resulting from the Recapitalization. As of the effective date of the
Recapitalization, the Bond Hedge Transaction covered, in the aggregate, 5,271,475 shares of Series A Liberty Formula
One common stock, 21,085,900 shares of Series A Liberty SiriusXM common stock and 2,108,590 shares of Series A
Liberty Braves common stock, subject to anti-dilution adjustments pertaining to the Convertible Notes, which was equal
to the aggregate number of shares comprising the Securities Basket underlying the Convertible Notes at that time. The
aggregate number of shares of Series A Liberty Braves common stock relating to the Bond Hedge Transaction was
increased to 2,292,037, pursuant to anti-dilution adjustments arising out of the rights distribution (note 2). As of
December 31, 2017, the basket price of the securities underlying the Bond Hedge Transaction was $50.24 per share. The
bond hedge expires on October 15, 2023 and is included in other assets as of December 31, 2017 and 2016 in the
accompanying consolidated balance sheets, with changes in the fair value recorded as unrealized gains (losses) on financial
instruments, in the accompanying consolidated statements of operations.
Concurrently with the Convertible Notes and Bond Hedge Transaction, Liberty also entered into separate privately
negotiated warrant transactions under which Liberty sold warrants relating to the same number of shares of common stock
as underlie the Bond Hedge Transaction, subject to anti-dilution adjustments (“Warrant Transactions”). The first expiration
date of the warrants is January 16, 2024 and expire over a period covering 81 days thereafter. Liberty may elect to settle
its delivery obligation under the warrant transactions with cash. In connection with the Recapitalization, Liberty entered
F-70
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
into amendments to the Warrant Transactions with each of the option counterparties to reflect the adjustments to the
Warrant Transactions resulting from the Recapitalization (“Amended Warrant Transactions”). As of the effective date of
the Recapitalization, the Amended Warrant Transactions covered, in the aggregate, 5,271,475 shares of Series A Liberty
Formula One common stock, 21,085,900 shares of Series A Liberty SiriusXM common stock and 2,108,590 shares of
Series A Liberty Braves common stock, subject to anti-dilution adjustments. The aggregate number of shares of Series A
Liberty Braves common stock relating to the Amended Warrant Transactions was increased to 2,292,037 pursuant to anti-
dilution adjustments arising out of the rights distribution. The strike price of the warrants was adjusted, as a result of the
Recapitalization and the rights offering, to $61.16 per share. As of December 31, 2017, the basket price of the securities
underlying the Amended Warrant Transactions was $50.24 per share. The Amended Warrant Transactions may have a
dilutive effect with respect to the shares comprising the Securities Basket underlying the warrants to the extent that the
settlement price exceeds the strike price of the warrants, and the warrants are settled in shares comprising such Securities
Basket.
1% Cash Convertible Notes due 2023
In connection with the Second Closing on January 23, 2017, Liberty issued $450 million convertible cash notes
at an interest rate of 1% per annum, which are convertible, under certain circumstances, into cash based on the trading
prices of the underlying shares of Series C Liberty Formula One common stock and mature on January 30, 2023 (the ‘‘1%
Convertible Notes’’). The initial conversion rate for the notes will be 27.1091 shares of Series C Liberty Formula One
common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $36.89 per
share of Series C Liberty Formula One common stock. The conversion of the 1% Convertible Notes will be settled solely
in cash, and not through the delivery of any securities. As discussed in note 5, Liberty used a portion of the net proceeds
of the 1% Convertible Notes to fund an increase to the cash consideration payable to the selling shareholders of Formula 1
by approximately $400 million.
2.25% Exchangeable Senior Debentures due 2046
On August 17, 2016, Liberty closed a private offering of approximately $445 million aggregate principal amount
of its 2.25% exchangeable senior debentures due 2046 (the “2.25% Exchangeable Senior Debentures due 2046”). Upon an
exchange of debentures, Liberty, at its option, may deliver Time Warner common stock, cash or a combination of Time
Warner common stock and cash. The number of shares of Time Warner common stock attributable to a debenture represents
an initial exchange price of approximately $104.55 per share. A total of approximately 4.25 million shares of Time Warner
common stock are attributable to the debentures. Interest is payable quarterly on March 31, June 30, September 30 and
December 31 of each year, commencing December 31, 2016. The debentures may be redeemed by Liberty, in whole or in
part, on or after October 5, 2021. Holders of the debentures also have the right to require Liberty to purchase their
debentures on October 5, 2021. The redemption and purchase price will generally equal 100% of the adjusted principal
amount of the debentures plus accrued and unpaid interest.
The debentures, as well as the associated cash proceeds, were attributed to the Formula One Group. Liberty used
the net proceeds of the offering for the acquisition of an investment in Formula 1 during September 2016, as further
described in note 5. Liberty has elected to account for the debentures using the fair value option. Accordingly, changes in
the fair value of these instruments are recognized as unrealized gains (losses) in the accompanying consolidated statements
of operations.
On October 22, 2016, AT&T Inc. (“AT&T”) and Time Warner announced that they entered into a definitive
agreement under which AT&T will acquire Time Warner in a stock-and-cash transaction. The transaction is subject to
approval by Time Warner shareholders and review by the U.S. Department of Justice, as well as potential review by the
FCC. If the acquisition is consummated, in accordance with the terms of the indenture governing the 2.25% Exchangeable
Senior Debentures due 2046, the cash portion of the acquisition consideration would be paid as an extraordinary additional
F-71
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
distribution to holders of debentures and the stock portion of the acquisition consideration would become reference shares
attributable to the debentures. Additionally, if the acquisition is consummated, any amount of excess regular quarterly cash
dividends paid on the AT&T reference shares would be distributed by the Company to holders of the debentures as an
additional distribution.
Margin Loans
$750 Million Margin Loan due 2018
On April 30, 2013, Liberty Siri MarginCo, LLC, a wholly-owned subsidiary of Liberty, entered into a margin loan
agreement. Shares of common stock of certain of the Company’s equity affiliates and cost investments were pledged as
collateral pursuant to this agreement. During October 2014, Liberty refinanced this margin loan arrangement for a similar
financial instrument with a term loan of $250 million and a $750 million undrawn line of credit. The term loan and any
drawn portion of the revolver bore interest at a rate of LIBOR plus an applicable spread between 1.75% and 2.50% (based
on value of collateral) with the undrawn portion carrying a fee of 0.75%. Interest on the term loan was payable on the first
business day of each calendar quarter, and interest was payable on the revolving line of credit on the last day of the interest
period applicable to the borrowing of which such loan is a part.
During October 2015, Liberty refinanced this margin loan arrangement for a similar financial instrument with a
term loan of $250 million and a $1 billion undrawn line of credit. As of December 31, 2015, shares of SIRIUS XM and
Live Nation were pledged as collateral pursuant to this agreement. The new term loan and any drawn portion of the revolver
carried an interest rate of LIBOR plus an applicable spread between 1.75% and 2.25% (based on the value of collateral)
with the undrawn portion carrying a fee of 0.75%. Other terms of the agreement were substantially similar to the previous
arrangement.
During October 2016, Liberty amended this margin loan arrangement to provide for a similar financial instrument
with a term loan of $250 million and a $500 million undrawn line of credit, which is scheduled to mature during October
2018. The new term loan and any drawn portion of the revolver carries an interest rate of LIBOR plus 1.75% with the
undrawn portion carrying a fee of 0.75%. Other terms of the agreement were substantially similar to the previous
arrangement, except shares of Live Nation common stock were no longer pledged as collateral under the new arrangement.
Borrowings outstanding under this margin loan bore interest at a rate of 3.24% per annum at December 31, 2017. As of
December 31, 2017, the Company had fully drawn against the revolving line of credit and 1,138.4 million shares of
SIRIUS XM common stock held by Liberty with a value of $6,102 million were pledged as collateral. As of December 31,
2017, the $750 million margin loan due 2018 is classified as current in the accompanying consolidated balance sheet. The
margin loan contains various affirmative and negative covenants that restrict the activities of the borrower. The loan
agreement does not include any financial covenants.
Live Nation Margin Loan
On November 8, 2016, LMC LYV, LLC, a wholly-owned subsidiary of Liberty, entered into a margin loan
agreement with an available borrowing capacity of $500 million with various financial institutions. This margin loan had
a two year term, bore interest at a rate of LIBOR plus 2.25% and contained an undrawn commitment fee of 0.75% per
annum. On December 12, 2017, the margin loan agreement was amended, extending the maturity date to December 12,
2019, and decreasing the interest rate to LIBOR plus 1.90% and the undrawn commitment fee to 0.60% per annum.
Borrowings outstanding under this margin loan bore interest at a rate of 3.23% per annum as of December 31, 2017. Interest
on the term loan is payable on the first business day of each calendar quarter. This loan was undrawn as of December 31,
2016. On January 20, 2017, LMC LYV, LLC drew $350 million under the margin loan, and the proceeds were used for the
Second Closing, as discussed in notes 2 and 5. As of December 31, 2017, availability under the Live Nation Margin Loan
was $150 million. 53.7 million shares of the Company’s Live Nation common stock with a value of $2,288 million and
F-72
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
other investments with a value of $57 million were pledged as collateral to the loan as of December 31, 2017. The margin
loan contains various affirmative and negative covenants that restrict the activities of the borrower. The loan agreement
does not include any financial covenants.
SIRIUS XM Senior Notes and Senior Secured Revolving Credit Facility
SIRIUS XM 5.75% Senior Notes Due 2021
During August 2013, SIRIUS XM issued $600 million of 5.75% Senior Notes due 2021 (“5.75% Notes”). Interest
on the notes is payable semi-annually in arrears on February 1 and August 1 of each year at a rate of 5.75% per annum.
Substantially all of SIRIUS XM’s domestic wholly-owned subsidiaries guarantee SIRIUS XM’s obligations under the
notes. The 5.75% Notes were issued for $594 million. On August 4, 2017, SIRIUS XM redeemed all of its 5.75% Notes
for a total amount of $618 million. This redemption resulted in a loss on extinguishment of debt of approximately
$21 million.
SIRIUS XM 5.25% Senior Secured Notes due 2022
In August 2012, SIRIUS XM issued $400 million aggregate principal amount of 5.25% Senior Secured Notes due
2022 (the “5.25% Notes”). Interest is payable semi-annually in arrears on February 15 and August 15 of each year at a rate
of 5.25% per annum. On September 1, 2017, SIRIUS XM redeemed all of its 5.25% Notes for a total amount of
$411 million. This redemption resulted in a loss on extinguishment of debt of approximately $14 million.
SIRIUS XM Senior Notes Due 2020 and 2023
In May 2013, SIRIUS XM issued $500 million of Senior Notes due 2020 which bear interest at an annual rate of
4.25% and $500 million of Senior Notes due 2023 which bear interest at an annual rate of 4.625%. SIRIUS XM received
net proceeds of $989 million from the sale of the notes after deducting commissions, fees and expenses. Interest on the
notes is payable semi-annually in arrears on May 15 and November 15 of each year. Substantially all of SIRIUS XM’s
domestic wholly-owned subsidiaries guarantee SIRIUS XM’s obligations under the notes. On July 27, 2017, SIRIUS XM
redeemed all of its 4.25% Notes for a total amount of $510 million. This redemption resulted in a loss on extinguishment
of debt of approximately $8 million.
SIRIUS XM Senior Notes Due 2022 and 2027
In July 2017, SIRIUS XM issued $1.0 billion aggregate principal amount of 3.875% Senior Notes due 2022 (the
“3.875% Notes”) and $1.5 billion aggregate principal amount of 5.00% Senior Notes due 2027 (the “5.00% Notes”). For
both series of notes, interest is payable semi-annually in arrears on February 1 and August 1, commencing on February 1,
2018. The 3.875% Notes will mature on August 1, 2022 and the 5.00% Notes will mature on August 1, 2027.
SIRIUS XM 6% Senior Notes due 2024
In May 2014, SIRIUS XM issued $1.5 billion aggregate principal amount of 6% Senior Notes due 2024 (the “6%
Notes”). Interest is payable semi-annually in arrears on January 15 and July 15 of each year at a rate of 6% per annum.
The 6% Notes will mature on July 15, 2024.
F-73
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
SIRIUS XM 5.375% Senior Notes due 2025
In March 2015, SIRIUS XM issued $1.0 billion principal amount of new senior notes due 2025 which bear interest
at an annual rate 5.375% (“SIRIUS XM 5.375% Senior Notes due 2025”) with an original issuance discount of $11 million.
The SIRIUS XM 5.375% Senior Notes due 2025 are recorded net of the remaining unamortized discount.
SIRIUS XM 5.375% Senior Notes due 2026
In May 2016, SIRIUS XM issued $1.0 billion principal amount of new senior notes due July 2026 which bear
interest at an annual rate 5.375% (“SIRIUS XM 5.375% Senior Notes due 2026”) with an original issuance discount of
$11 million. The SIRIUS XM 5.375% Senior Notes due 2026 are recorded net of the remaining unamortized discount.
SIRIUS XM Senior Secured Revolving Credit Facility
SIRIUS XM entered into a Senior Secured Revolving Credit Facility (the “Credit Facility”) with a syndicate of
financial institutions with a total borrowing capacity of $1,750 million which matures in June 2020. The Credit Facility is
guaranteed by certain of SIRIUS XM’s material domestic subsidiaries and is secured by a lien on substantially all of
SIRIUS XM’s assets and the assets of its material domestic subsidiaries. The proceeds of loans under the Credit Facility
are used for working capital and other general corporate purposes, including financing acquisitions, share repurchases and
dividends. Interest on borrowings is payable on a monthly basis and accrues at a rate based on LIBOR plus an applicable
rate. Borrowings outstanding under the Credit Facility as of December 31, 2017 bore interest at a rate of 3.30% per annum.
SIRIUS XM is required to pay a variable fee on the average daily unused portion of the Credit Facility which was 0.25%
as of December 31, 2017 and is payable on a quarterly basis. The Credit Facility contains customary covenants, including
a maintenance covenant. As of December 31, 2017, availability under the Credit Facility was $1,450 million.
Braves Holdings Notes and Loans
Braves Holdings’ debt is summarized as follows:
Carrying value
As of December 31, 2017
December 31,
2017
December 31, Borrowing
Capacity
2016
Weighted avg
interest rate
Maturity
Date
Operating credit facilities . . . . . . . . $
Ballpark funding
Term loan . . . . . . . . . . . . . . . . . . . .
Senior secured note . . . . . . . . . . . .
Floating rate notes . . . . . . . . . . . . .
Mixed-use credit facilities (a) . . . . .
Spring training credit facility . . . . .
Total Braves Holdings . . . . . . . $
amounts in millions
61
98
185
2.43%
various
55
200
75
200
39
667
10
200
—
67
—
338
55
200
75
237
40
792
August 2021
3.06%
August 2041
3.77%
3.06% September 2029
various
3.85%
2.56% December 2022
(a) As discussed in note 7, 464 thousand Time Warner shares with a fair value of $42 million were pledged as collateral
to certain mixed-use facilities as of December 31, 2017.
F-74
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
In 2014, Braves Holdings, through a wholly-owned subsidiary, purchased 82 acres of land for the purpose of
constructing a Major League Baseball facility and development of a mixed-use complex adjacent to the ballpark. The total
cost of the ballpark was approximately $722 million, of which approximately $392 million was funded by a combination
of Cobb County, the Cumberland Improvement District and Cobb-Marietta Coliseum and Exhibit Hall Authority (the
“Authority”) and approximately $330 million was funded by Braves Holdings. Funding for ballpark initiatives by Braves
Holdings came from cash on hand and various debt instruments, as detailed above.
In addition, Braves Holdings through affiliated entities and outside development partners are in the process of
developing the land around the ballpark for a mixed-use complex that features retail, residential, office, hotel and
entertainment opportunities. The estimated cost for the mixed-use development, known as The Battery Atlanta, is
$558 million, of which Braves Holdings affiliated entities are expected to fund approximately $470 million through a mix
of approximately $200 million in equity and $270 million in new debt. As of December 31, 2017, approximately
$419 million has been spent on the mixed-use development. Braves Holdings funded approximately $388 million of this
amount through a mix of $188 million in equity and approximately $200 million in debt.
Formula 1 Notes and Loans
Bank Loans
Formula 1 had a first lien term loan denominated in Euros totaling $42 million, which was repaid on June 30,
2017. On August 3, 2017, Formula 1 increased the amount outstanding under a first lien term loan denominated in U.S.
Dollars (the “Senior Loan Facility”) from $3.1 billion to $3.3 billion and extended its maturity to February 2024. In
addition, on August 3, 2017, the revolving credit facility under the Senior Loan Facility was increased from $75 million to
$500 million. As part of a refinancing of the Senior Loan Facility in March 2017, $628 million of the Senior Loan Facility
was considered repaid and then borrowed due to a change in the mix of counterparties in the Senior Loan Facility. As part
of the refinancing in March 2017, the interest rate on the Senior Loan Facility was reduced from LIBOR plus 3.75% per
annum to LIBOR plus 3.25% per annum, with a LIBOR floor on the U.S. Dollar denominated debt of 1%. In September
2017, the interest rate on the Senior Loan Facility was reduced to LIBOR plus 3.0% per annum. The interest rate on the
Senior Loan Facility was approximately 4.57% as of December 31, 2017. The Senior Loan Facility is secured by share
pledges, bank accounts and floating charges over Formula 1’s primary operating companies with certain cross guarantees.
Additionally, as of December 31, 2017, Formula 1 has interest rate swaps on $2.5 billion of the $3.3 billion Senior Loan
Facility in order to manage its interest rate risk.
On January 31, 2018, Formula 1 refinanced the Senior Loan Facility. As part of the refinancing, Formula 1 repaid
$400 million of the Senior Loan Facility, reducing the amount outstanding to $2.9 billion. The repayment was funded
through borrowings of $250 million under the revolving credit facility and $150 million of cash on hand. The interest rate
on the Senior Loan Facility was reduced to LIBOR plus 2.5% per annum.
Formula 1 also had a second lien facility, which had $1 billion outstanding at the time of the acquisition of
Formula 1 by Liberty. In May 2017, Liberty issued 12.9 million shares of Series C Liberty Formula One common stock
and used the net proceeds of approximately $388 million to repay a portion of the second lien facility. Formula 1 fully
repaid the second lien facility during the year ended December 31, 2017.
Delta Topco Limited Exchangeable Redeemable Loan Notes
As discussed in note 5, in connection with the Second Closing on January 23, 2017, Delta Topco issued the
Exchangeable Notes upon the conversion of certain outstanding Delta Topco loan notes. The Exchangeable Notes bore
interest at 2% per annum and were exchangeable into cash or newly issued shares of Series C Liberty Formula One
common stock. Interest was payable by either, at the discretion of Delta Topco, (i) issuing payment-in-kind notes or
F-75
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
(ii) cash. In September 2017, $323 million aggregate principal amount of Exchangeable Notes were exchanged for
14.5 million shares of Series C Liberty Formula One common stock. In November 2017, the remaining $27 million
aggregate principal amount of Exchangeable Notes were exchanged for 1.2 million shares of Series C Liberty Formula
One common stock.
The Exchangeable Notes were attributed to the Formula One Group. The debt host component of the
Exchangeable Notes was recorded as debt, at fair value (level 2), with the related discount amortized using the effective
interest rate method, while the embedded conversion option was recorded in additional paid-in capital. Upon settlement,
the Company recorded a true-up to additional paid-in capital for the amount and type (shares of Series C Liberty Formula
One common stock) of settlement.
Debt Covenants
The SIRIUS XM Credit Facility contains certain financial covenants related to SIRIUS XM’s leverage ratio.
Braves Holdings’ term loan contains certain financial covenants related to Braves Holdings’ debt service coverage ratio
and capital expenditures. Additionally, SIRIUS XM’s Credit Facility, the Braves Holdings term loan, Formula 1 debt and
other borrowings contain certain non-financial covenants. As of December 31, 2017, the Company, SIRIUS XM,
Formula 1 and Braves Holdings were in compliance with all debt covenants.
Fair Value of Debt
The fair value, based on quoted market prices of the same instruments but not considered to be active markets
(Level 2), of SIRIUS XM’s publicly traded debt securities is as follows (amounts in millions):
$
SIRIUS XM 3.875% Senior Notes due 2022 . . . . . . . . . . . .
SIRIUS XM 4.625% Senior Notes due 2023 . . . . . . . . . . . .
$
SIRIUS XM 6% Senior Notes due 2024 . . . . . . . . . . . . . . . $
SIRIUS XM 5.375% Senior Notes due 2025 . . . . . . . . . . . . $
SIRIUS XM 5.375% Senior Notes due 2026 . . . . . . . . . . . . $
SIRIUS XM 5.0% Senior Notes due 2027 . . . . . . . . . . . . . . $
December 31,
2017
1,002
510
1,587
1,038
1,039
1,500
Due to the variable rate nature of the Credit Facility, margin loans and other debt, the Company believes that the
carrying amount approximates fair value at December 31, 2017.
Five Year Maturities
The annual principal maturities of outstanding debt obligations for each of the next five years is as follows
(amounts in millions):
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
$
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
770
544
437
59
1,052
F-76
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
(11) Income Taxes
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the
Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but
not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) bonus depreciation that
will allow for full expensing of qualified property; (3) creating a new limitation on deductible interest expense;
(4) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized;
(5) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after
December 31, 2017; (6) limitations on the deductibility of certain executive compensation; and (7) requiring a one-time
transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years. The SEC issued
guidance on accounting for the tax effects of the Tax Act. The Company must reflect the income tax effects of those aspects
of the Tax Act for which the accounting is known. To the extent that a company’s accounting for certain income tax effects
of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the
financial statements and the Tax Act provides a measurement period that should not extend beyond one year from the Tax
Act enactment date. If a company cannot determine a provisional estimate to be included in the financial statements, it
should continue to apply the tax laws that were in effect immediately before the enactment of the Tax Act.
The corporate rate reduction was applied to our inventory of deferred tax assets and deferred tax liabilities which
resulted in the net tax benefit in the period ending December 31, 2017. This net tax benefit is a provisional estimate. The
Tax Act also provides for a mandatory one-time transition tax on deemed repatriated accumulated earnings and profits of
foreign subsidiaries. Liberty estimates that its foreign subsidiaries have accumulated earnings and profits deficits and will
not be subject to the transition tax. Based on a continued analysis of the estimate and further guidance and interpretations
on the application of the law, additional revisions may occur throughout the allowable measurement period.
Income tax benefit (expense) consists of:
Years ended December 31,
2017
2016
2015
amounts in millions
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38
(30)
(9)
(1)
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
578
(21)
507
1,064
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,063
(39)
(29)
—
(68)
(388)
(39)
—
(427)
(495)
(17)
(17)
(1)
(35)
(145)
(30)
—
(175)
(210)
F-77
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of
35% as a result of the following:
Years ended December 31,
2017
2016
2015
amounts in millions
Computed expected tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State and local income taxes, net of federal income taxes . . . . . . . . . . . . . .
Foreign income taxes, net of federal income taxes . . . . . . . . . . . . . . . . . . . .
Dividends received deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxable dividends not recognized for book purposes . . . . . . . . . . . . . . . . . .
Federal tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance affecting tax expense . . . . . . . . . . . . . . . . . .
Change in tax rate due to Tax Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements with tax authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible / Non-taxable interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off of tax attributes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(289)
(37)
88
38
(45)
22
212
929
253
(22)
(60)
(42)
16
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,063
(497)
(46)
—
11
(11)
67
(1)
—
—
—
—
—
(18)
(495)
(160)
(1)
—
2
—
—
(44)
—
—
—
—
—
(7)
(210)
For the year ended December 31, 2017, the significant reconciling items, as noted in the table above, are a net tax
benefit for the effect of the changes in the U.S. federal corporate tax rate from 35% to 21% on deferred taxes, a net tax
benefit for a settlement reached by Formula 1 with the U.K. tax authorities and a net tax benefit for the effects of a new
U.K. tax law that changed the Company’s judgment with respect to the future realization of U.K. tax losses.
For the year ended December 31, 2016 the significant reconciling item, as noted in the table above, is state income
taxes offset with federal income tax credits claimed by SIRIUS XM related to research and development activities.
For the year ended December 31, 2015 the significant reconciling item, as noted in the table above, is a
$44 million increase in the valuation allowance due to the effect of a tax law change in the District of Columbia (“D.C.”)
which reduces the future allocation of SIRIUS XM’s taxable income in D.C. As a result, SIRIUS XM expects it will utilize
less of its D.C. net operating losses in the future, resulting in a $44 million increase in the valuation allowance offsetting
the deferred tax asset for these net operating losses.
F-78
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and
deferred income tax liabilities are presented below:
December 31,
2017
2016
amounts in millions
Deferred tax assets:
Net operating and capital loss carryforwards and tax credits . . . . . . . . . . . . $ 1,017 1,381
136
Accrued stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
761
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Discount on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Other future deductible amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,830 2,400
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(112)
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(50)
1,718 2,350
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
88
175
502
26
22
Deferred tax liabilities:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81
330
2,760 3,961
3
3,196 4,375
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,478 2,025
110
326
—
SIRIUS XM’s deferred tax assets and liabilities are included in the amounts above although SIRIUS XM’s
deferred tax assets and liabilities are not offset with Liberty’s deferred tax assets and liabilities as SIRIUS XM is not
included in the consolidated group tax return of Liberty. Liberty’s acquisition of a controlling interest in SIRIUS XM’s
outstanding common stock during January 2013 did not cause a change in control under Section 382 of the Code.
During the year ended December 31, 2017, the $62 million increase in the Company’s valuation allowance was
primarily driven by a $274 million increase due to the acquisition of Formula 1, partially offset by changes in the valuation
allowance affecting tax expense.
At December 31, 2017, the Company had federal and state net operating loss carryforwards for income tax
purposes which, if not utilized to reduce taxable income in future periods, will expire on various dates through 2037. The
Company’s federal net operating loss carryforwards are primarily attributable to those at the SIRIUS XM level
($1,977 million, $415 million tax effected). The Company has U.K. net operating loss carryforwards for income tax
purposes, which have no expiration under current U.K. law.
F-79
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
A reconciliation of unrecognized tax benefits is as follows:
December 31,
2017 2016
2015
amounts in millions
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . $ 304 254
Reductions for tax positions of prior years . . . . . . . . . .
Increase in tax positions for current year . . . . . . . . . . . .
Increase in tax positions from prior years . . . . . . . . . . .
Settlements with tax authorities . . . . . . . . . . . . . . . . . . .
Increase in tax positions from acquisition . . . . . . . . . . .
(1)
51
—
—
—
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 365 304
(1)
16
37
(423)
432
2
—
—
252
—
—
254
As of December 31, 2017, the Company had recorded tax reserves of $365 million related to unrecognized tax
benefits for uncertain tax positions. If such tax benefits were to be recognized for financial statement purposes,
approximately $257 million dollars would be reflected in the Company’s tax expense and affect its effective tax rate. We
do not currently anticipate that our existing reserves related to uncertain tax positions as of December 31, 2017 will
significantly increase or decrease during the twelve-month period ending December 31, 2018; however, various events
could cause our current expectations to change in the future. The Company’s estimate of its unrecognized tax benefits
related to uncertain tax positions requires a high degree of judgment.
As of December 31, 2017, the Company’s tax years prior to 2014 are closed for federal income tax purposes, and
the IRS has completed its examination of the Company’s 2014 through 2016 tax years. The Company’s tax loss
carryforwards from its 2011 through 2015 tax years are still subject to adjustment. The Company’s 2017 tax year is being
examined currently as part of the IRS’s Compliance Assurance Process program. Various states are currently examining
the Company’s prior years state income tax returns. SIRIUS XM, which does not consolidate with Liberty for income tax
purposes, has certain state income tax audits pending. We do not expect the ultimate disposition of these audits to have a
material adverse effect on our financial position or results of operations.
As of December 31, 2017, the Company had less than $1 million dollars in accrued interest and penalties recorded
related to uncertain tax positions.
(12) Stockholders’ Equity
Preferred Stock
Liberty’s preferred stock is issuable, from time to time, with such designations, preferences and relative
participating, optional or other rights, qualifications, limitations or restrictions thereof, as shall be stated and expressed in
a resolution or resolutions providing for the issue of such preferred stock adopted by Liberty’s board of directors. As of
December 31, 2017, no shares of preferred stock were issued.
Common Stock
As discussed in note 2, on April 15, 2016, the Company completed the Recapitalization of its common stock into
three new tracking stock groups, one designated as the Liberty SiriusXM common stock, one designated as the Liberty
Braves common stock and one designated as the Liberty Media common stock. As further discussed in note 2, the Liberty
F-80
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Media common stock was renamed Liberty Formula One common stock on January 24, 2017 shortly after the Second
Closing. The operating results prior to the Recapitalization are attributed to Liberty stockholders in the aggregate, and the
operating results subsequent to the Recapitalization are attributed to the respective tracking stock groups.
As discussed in note 1, on July 23, 2014, holders of Series A and Series B Liberty Media Corporation common
stock received a dividend of two shares of Series C Liberty Media Corporation common stock for each share of Series A
or Series B Liberty Media Corporation common stock held by them as of July 7, 2014.
Series A Liberty SiriusXM, Liberty Braves and Liberty Formula One common stock have one vote per share,
Series B Liberty SiriusXM, Liberty Braves and Liberty Formula One common stock have ten votes per share and Series C
Liberty SiriusXM, Liberty Braves and Liberty Formula One common stock have no votes per share except as otherwise
required by Delaware law. Each share of Series B common stock is exchangeable at the option of the holder for one share
of Series A common stock of the same group. All series of our common stock participate on an equal basis with respect to
dividends and distributions.
Purchases of Common Stock
During the year ended December 31, 2015, the Company repurchased 9.2 million shares of Series A and Series C
Liberty Media Corporation common stock for aggregate cash consideration of $350 million under the authorized
repurchase program. All of the foregoing shares obtained have been retired and returned to the status of authorized and
available for issuance.
There were no repurchases of Liberty common stock made pursuant to the Company’s authorized repurchase
program during the years ended December 31, 2016 and 2017.
Dividends Declared by Subsidiary
On October 26, 2016, SIRIUS XM’S board of directors declared the first quarterly dividend on SIRIUS XM
common stock in the amount of $0.01 per share of common stock to stockholders of record on November 9, 2016. The
dividend was paid in cash on November 30, 2016 in the amount of $48 million, of which Liberty received $32 million.
During the year ended December 31, 2017, SIRIUS XM declared a cash dividend each quarter, and has paid in
cash an aggregate amount of $190 million, of which Liberty has received $130 million. SIRIUS XM’s board of directors
expects to declare regular quarterly dividends, in an aggregate annual amount of $0.044 per share of common stock. On
January 23, 2018, SIRIUS XM’s board of directors declared a quarterly dividend on its common stock in the amount of
$0.011 per share of common stock, payable on February 28, 2018 to stockholders of record at the close of business on
February 7, 2018.
(13) Related Party Transactions with Officers and Directors
Chief Executive Officer Compensation Arrangement
In December 2014, the Compensation Committee (the “Committee”) of Liberty approved a compensation
arrangement, including term options as discussed in note 14, for its President and Chief Executive Officer (the “CEO”).
The arrangement provides for a five year employment term which began on January 1, 2015 and ends December 31, 2019,
with an annual base salary of $960,750, increasing annually by 5% of the prior year’s base salary, and an annual target
cash bonus equal to 250% of the applicable year’s annual base salary. The arrangement also provides that, in the event the
CEO is terminated for “cause,” he will be entitled only to his accrued base salary and any amounts due under applicable
F-81
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
law and he will forfeit all rights to his unvested term options. If, however, the CEO is terminated by Liberty without cause
or if he terminates his employment for “good reason,” he will be entitled to his accrued base salary, his accrued but unpaid
bonus and any amounts due under applicable law, a severance payment of 1.5 times his base salary during the year of his
termination, a payment equal to $11,750,000 pro rated based upon the elapsed number of days in the calendar year of
termination, a payment equal to $17.5 million, and his unvested term options will generally vest pro rata based on the
portion of the term elapsed through the termination date plus 18 months and for all vested and accelerated options to remain
exercisable until their respective expiration dates. If, however, the CEO terminates his employment without “good reason,”
he will be entitled to his accrued base salary, his accrued but unpaid bonus and any amounts due under applicable law, a
payment equal to $11,750,000 pro rated based upon the elapsed number of days in the calendar year of termination, and
for his unvested term options to generally vest pro rata based on the portion of the term elapsed through the termination
date and all vested and accelerated options to remain exercisable until their respective expiration dates. Lastly, in the case
of the CEO’s death or his disability, he is entitled to his accrued base salary, his accrued but unpaid bonus and any amounts
due under applicable law, a payment of 1.5 times his base salary during the year of his termination, a payment equal to
$11,750,000 pro rated based upon the elapsed number of days in the calendar year of termination, a payment equal to
$17.5 million, and for his unvested term options to fully vest and for his vested and accelerated term options to remain
exercisable until their respective expiration dates.
Beginning in 2015, the CEO receives annual performance-based options to purchase shares of Series C Liberty
Formula One common stock with a term of 7 years (the “Performance Options”) and performance-based restricted stock
units with respect to Series C Liberty Formula One common stock (the “Performance RSUs” and together with the
Performance Options, the “Performance Awards”) during the employment term. Grants of Performance Awards will be
allocated between Liberty and Liberty Interactive. The aggregate target amount to be allocated between Liberty and Liberty
Interactive will be $16 million with respect to calendar year 2015, $17 million with respect to calendar year 2016,
$18 million with respect to calendar year 2017, $19 million with respect to calendar year 2018 and $20 million with respect
to calendar year 2019. Vesting of the Performance Awards will be determined based on satisfaction of performance metrics
that will be set by Liberty and Liberty Interactive’s respective compensation committees in the first quarter of each
applicable year, except that the CEO will forfeit his unvested Performance Awards if his employment is terminated for any
reason before the end of the applicable year, except that the CEO will forfeit his unvested Performance Awards if his
employment is terminated for any reason before the end of the applicable year. In addition, Liberty and Liberty Interactive’s
compensation committees may grant additional Performance Awards, with a value of up to 50% of the target amount
allocated to Liberty for the relevant year (the “Above Target Awards”), and the compensation committees may determine
to establish additional performance metrics with respect to such Above Target Awards.
Salary compensation related to services provided by the CEO is charged from Liberty to Liberty TripAdvisor and
Liberty Broadband pursuant to the Services Agreements with each respective company. Any cash bonus attributable to the
performance of Liberty or Liberty Interactive is paid directly by each respective company.
Chairman’s Employment Agreement
On December 12, 2008, the Committee determined to modify its employment arrangements with its Chairman of
the Board, to permit the Chairman to begin receiving payments in 2009 in satisfaction of Liberty’s obligations to him under
two deferred compensation plans and a salary continuation plan. Under one of the deferred compensation plans (the “8%
Plan”), compensation has been deferred by the Chairman since January 1, 1993 and accrues interest at the rate of 8% per
annum compounded annually from the applicable date of deferral. The amount owed to the Chairman under the 8% Plan
aggregated approximately $2.4 million at December 31, 2008. Under the second plan (the “13% Plan”), compensation was
deferred by the Chairman from 1982 until December 31, 1992 and accrues interest at the rate of 13% per annum
compounded annually from the applicable date of deferral. The amount owed to the Chairman under the 13% Plan
aggregated approximately $20 million at December 31, 2008. Both deferred compensation plans had provided for payment
of the amounts owed to him in 240 monthly installments beginning upon termination of his employment. Under his salary
F-82
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
continuation plan, the Chairman would have been entitled to receive $15,000 (increased at the rate of 12% per annum
compounded annually from January 1, 1998 to the date of the first payment, (the “Base Amount”) per month for 240
months beginning upon termination of his employment. The amount owed to the Chairman under the salary continuation
plan aggregated approximately $39 million at December 31, 2008. There is no further accrual of interest under the salary
continuation plan once payments have begun.
The Committee determined to modify all three plans and began making payments to the Chairman in 2009, while
he remains employed by the Company. By commencing payments under the salary continuation plan, interest ceased to
accrue on the Base Amount. As a result of these modifications, the Chairman will receive 240 equal monthly installments
as follows: (1) approximately $20,000 under the 8% Plan; (2) approximately $237,000 under the 13% Plan; and
(3) approximately $164,000 under the salary continuation plan.
The Committee also approved certain immaterial amendments to the Chairman’s employment agreement intended
to comply with Section 409A of the Internal Revenue Code.
(14) Stock-Based Compensation
Liberty—Incentive Plans
Pursuant to the Liberty Media Corporation 2017 Omnibus Incentive Plan (the “2017 Plan”), the company may
grant Awards to purchase shares of Series A, Series B and Series C Liberty Media Corporation common stock. The 2017
Plan provides for Awards to be made in respect of a maximum of 50.0 million shares of Liberty Media Corporation
common stock. Awards generally vest over 4-5 years and have a term of 7-10 years. Liberty issues new shares upon exercise
of equity awards. The Company measures the cost of employee services received in exchange for an Award of equity
instruments (such as stock options and restricted stock) based on the grant-date fair value (“GDFV”) of the Award, and
recognizes that cost over the period during which the employee is required to provide service (usually the vesting period
of the Award).
In connection with the Recapitalization during 2016, all outstanding Awards with respect to Liberty Media
Corporation common stock (“Liberty Awards”) were adjusted pursuant to the anti-dilution provisions of the incentive plans
under which the equity awards were granted, such that a holder of a Liberty Award received new corresponding equity
awards relating to shares of one or more series of Liberty SiriusXM common stock, Liberty Braves common stock and
Liberty Formula One common stock (collectively, the “Adjusted Liberty Awards”).
All of the pre-Recapitalization value of the Liberty Awards was allocated among the Adjusted Liberty Awards.
F-83
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Liberty—Grants of stock options
Awards granted in 2017, 2016 and 2015 are summarized as follows:
Years ended December 31,
2017
2016
Options Weighted Options Weighted Options Weighted
granted average
granted average
granted average
(000's) GDFV (000's) GDFV
(000's) GDFV
2015
NA
NA
Series C Liberty Media Corporation common stock, Liberty
employees and directors (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Liberty Media Corporation common stock, Liberty
CEO (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Liberty SiriusXM common stock, Liberty employees
and directors (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Liberty SiriusXM common stock, Liberty CEO (3) .
Series C Liberty Formula One common stock, Liberty
employees and directors (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Liberty Formula One common stock, Liberty
CEO (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Liberty Formula One common stock, Formula 1
employees (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,015 $
Series C Liberty Braves common stock, Liberty employees
and directors (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series C Liberty Braves common stock, Liberty CEO (3) . . .
35 $
149 $
171 $
153 $
NA
10 $ 8.33 2,056 $ 13.62
NA
775 $ 8.91
420 $ 12.15
263 $ 10.39
920 $
8.50 NA
415 $ 7.50
NA
NA
NA
9.42
101 $ 4.89
NA
NA
NA
NA
8.96 NA
NA
NA
NA
8.16 NA
NA
NA
NA
6.14
41 $ 3.79
6.02 NA NA
NA
NA
NA
NA
(1) Mainly vests between three and five years for employees and in one year for directors.
(2) Grant in 2016 cliff vested in December 2016; grant in 2015 cliff vested in March 2016. Grants were made in connection
with the CEO’s employment agreement.
(3) Grants in 2017 mainly cliff vested in December 2017.
(4) Vest monthly over one year.
In addition to the stock option grants to the Liberty CEO, and in connection with his employment agreement,
Liberty granted performance-based restricted stock units (“RSUs”). During the year ended December 31, 2017, Liberty
granted 50 thousand RSUs of Series C Liberty Formula One common stock with a GDFV of $33.92 per share. During the
years ended December 31, 2016 and 2015, Liberty granted 39 thousand RSUs and 34 thousand RSUs, respectively, of
Series C Liberty Media Corporation common stock. Such RSUs had a GDFV of $37.76 per share and $38.20 per share,
respectively. The 2017, 2016 and 2015 performance-based RSUs cliff vested in one year, subject to the satisfaction of
certain performance objectives and based on an amount determined by the compensation committee. Performance
objectives, which are subjective, are considered in determining the timing and amount of the compensation expense
recognized. As the satisfaction of the performance objectives becomes probable, the Company records compensation
expense. The value of the grant is remeasured at each reporting period.
The Company did not grant any options to purchase Series A or Series B of Liberty SiriusXM, Liberty Braves or
Liberty Formula One common stock during the year ended December 31, 2017.
The Company has calculated the GDFV for all of its equity classified awards using the Black-Scholes Model.
The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. For grants made
F-84
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
in 2017, 2016 and 2015, the range of expected terms was 3.5 to 6.7 years. The volatility used in the calculation for Awards
is based on the historical volatility of Liberty’s stocks and the implied volatility of publicly traded Liberty options. The
Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject
options.
The following table presents the volatilities used by the Company in the Black-Scholes Model for the 2017, 2016
and 2015 grants.
2017 grants
Liberty options . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.6 % - 29.8 %
2016 grants
Liberty options . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.6 % - 26.8 %
Volatility
2015 grants
Liberty options . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.7 % - 36.7 %
Liberty—Outstanding Awards
The following table presents the number and weighted average exercise price (“WAEP”) of Awards to purchase
Liberty common stock granted to certain officers, employees and directors of the Company, as well as the weighted average
remaining life and aggregate intrinsic value of the Awards.
Liberty SiriusXM
Series A
Weighted Aggregate
average
intrinsic
Liberty
remaining
Awards (000's) WAEP
life
value
(in millions)
— $
2,018 $ 19.39
—
(392) $ 17.74
—
1,626 $ 19.78 2.0 years $
1,615 $ 19.73 2.0 years $
— $
32
32
Outstanding at January 1, 2017 . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2017 . . . . . . . . . . . . . . . . . .
Exercisable at December 31, 2017 . . . . . . . . . . . . . . . . . .
F-85
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Series C
Liberty
Awards (000's) WAEP
average
Weighted Aggregate
intrinsic
value
(in millions)
remaining
life
Outstanding at January 1, 2017 . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2017 . . . . . . . . . . . . . . . . . .
Exercisable at December 31, 2017. . . . . . . . . . . . . . . . . . .
11,008 $ 25.91
1,183 $ 37.65
(810) $ 18.14
(53) $ 32.74
11,328 $ 27.66 4.1 years $
5,882 $ 25.77 3.6 years $
136
82
Liberty Formula One
Series A
Liberty
Awards (000's) WAEP
Weighted Aggregate
intrinsic
value
(in millions)
average
remaining
life
Outstanding at January 1, 2017 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2017 . . . . . . . . . . . . . . . . .
Exercisable at December 31, 2017 . . . . . . . . . . . . . . . . .
455 $ 11.55
—
— $
(55) $ 10.55
—
— $
400 $ 11.69 2.0 years $
397 $ 11.66 2.0 years $
8
8
Series C
Weighted
average
remaining
Liberty
Awards (000's) WAEP
life
Aggregate
intrinsic
value
(in millions)
Outstanding at January 1, 2017 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/Cancelled . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2017 . . . . . . . . . . . . .
Exercisable at December 31, 2017 . . . . . . . . . . . . .
2,611 $ 15.18
2,339 $ 34.04
(177) $ 11.08
(13) $ 19.78
4,760 $ 24.59
2,380 $ 24.42
5.0 years $
4.7 years $
46
23
F-86
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Liberty Braves
Series A
Liberty
Awards (000's) WAEP
average
Weighted Aggregate
intrinsic
value
(in millions)
remaining
life
Outstanding at January 1, 2017 . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2017 . . . . . . . . . . . . . . . . . .
Exercisable at December 31, 2017 . . . . . . . . . . . . . . . . . . .
189 $ 11.30
— $
—
(10) $ 8.83
—
— $
179 $ 11.43 2.0 years $
178 $ 11.41 2.0 years $
2
2
Series C
Liberty
Awards (000's) WAEP
average
Weighted Aggregate
intrinsic
value
(in millions)
remaining
life
Outstanding at January 1, 2017 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2017 . . . . . . . . . . . . . . . . .
Exercisable at December 31, 2017 . . . . . . . . . . . . . . . . . .
1,073 $ 14.92
184 $ 23.37
(21) $ 9.05
(5) $ 19.01
1,231 $ 16.27 4.1 years $
686 $ 15.71 3.7 years $
8
5
There were no outstanding Series B options to purchase shares of Series B Liberty SiriusXM common stock,
Liberty Formula One common stock or Liberty Braves common stock during 2017.
As of December 31, 2017, the total unrecognized compensation cost related to unvested Liberty Awards was
approximately $30 million. Such amount will be recognized in the Company’s consolidated statements of operations over
a weighted average period of approximately 1.7 years.
As of December 31, 2017, 13.0 million, 5.2 million and 1.4 million shares of Series A and Series C Liberty
SiriusXM, Liberty Formula One and Liberty Braves common stock, respectively, were reserved for issuance under exercise
privileges of outstanding stock Awards.
Liberty—Exercises
The aggregate intrinsic value of all options exercised during the years ended December 31, 2017, 2016 and 2015
was $31 million, $24 million and $40 million, respectively.
F-87
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Liberty—Restricted Stock
The Company had approximately 229 thousand, 137 thousand and 26 thousand unvested restricted shares of
Liberty SiriusXM, Liberty Formula One, and Liberty Braves common stock, respectively, held by certain directors, officers
and employees of the Company as of December 31, 2017. These Series A and Series C unvested restricted shares of Liberty
SiriusXM common stock, Liberty Formula One common stock and Liberty Braves common stock had a weighted average
GDFV of $25.30, $28.43, and $17.04 per share, respectively.
The aggregate fair value of all restricted shares of Liberty common stock that vested during the years ended
December 31, 2017, 2016 and 2015 was $85 million, $7 million and $2 million, respectively.
SIRIUS XM—Stock-based Compensation
During the year ended December 31, 2017, SIRIUS XM granted stock options and restricted stock units (“RSUs”)
to its employees and members of its board of directors. During the years ended December 31, 2017 and 2016, SIRIUS XM
also granted performance-based restricted stock units (“PRSUs”) to certain employees, the vesting of which is subject to
the employee’s continuing employment and SIRIUS XM’s achievement of certain performance goals. The PRSUs awards
cliff vest on the three-year anniversary of the grant date. SIRIUS XM also calculates the grant-date fair value for all of its
equity classified awards and any subsequent remeasurement of its liability classified awards using the Black-Scholes
Model. The weighted average volatility applied to the fair value determination of SIRIUS XM’s option grants during 2017,
2016 and 2015 was 24%, 22% and 29%, respectively. During the year ended December 31, 2017, SIRIUS XM granted
approximately 27.3 million stock options with a weighted-average exercise price of $5.49 per share and a grant date fair
value of $1.17 per share. As of December 31, 2017, SIRIUS XM has approximately 280.5 million options outstanding of
which approximately 131 million are exercisable, each with a weighted-average exercise price per share of $3.76 and
$3.23, respectively. The aggregate intrinsic value of these outstanding and exercisable options was $454 million and
$279.1 million, respectively. During the year ended December 31, 2017, SIRIUS XM granted approximately 11.7 million
RSUs and PRSUs with a grant date fair value of $5.35 per share. The stock-based compensation related to SIRIUS XM
stock options and restricted stock awards was $124 million, $109 million and $157 million for the years ended
December 31, 2017, 2016, and 2015, respectively. As of December 31, 2017, the total unrecognized compensation cost
related to unvested SIRIUS XM stock options was $242 million. The SIRIUS XM unrecognized compensation cost will
be recognized in the Company’s consolidated statements of operations over a weighted average period of approximately
2.5 years.
(15) Employee Benefit Plans
Liberty is the sponsor of the Liberty Media 401(k) Savings Plan (the “Liberty 401(k) Plan”), which provides its
employees and the employees of certain of its subsidiaries an opportunity for ownership in the Company and creates a
retirement fund. The Liberty 401(k) Plan provides for employees to make contributions to a trust for investment in Liberty
common stock, as well as several mutual funds. The Company and its subsidiaries make matching contributions to the
Liberty 401(k) Plan based on a percentage of the amount contributed by employees. In addition, certain of the Company’s
subsidiaries have similar employee benefit plans. Employer cash contributions to all plans aggregated $17 million,
$13 million and $15 million for each of the years ended December 31, 2017, 2016 and 2015, respectively.
F-88
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
(16) Other Comprehensive Earnings (Loss)
Accumulated other comprehensive earnings (loss) included in Liberty’s consolidated balance sheets and
consolidated statements of equity reflect the aggregate of foreign currency translation adjustments, unrealized holding
gains and losses on AFS securities and Liberty’s share of accumulated other comprehensive earnings of affiliates.
The change in the components of accumulated other comprehensive earnings (loss), net of taxes (“AOCI”), is
summarized as follows:
Unrealized Foreign
currency
holding
gains (losses) translation
on securities adjustment Other
AOCI
Balance at January 1, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive earnings (loss) attributable to Liberty stockholders . .
Balance at December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive earnings (loss) attributable to Liberty stockholders . .
Balance at December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive earnings (loss) attributable to Liberty stockholders . .
Balance at December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
amounts in millions
—
(23)
(23)
1
(22)
16
(6)
(11)
(7)
(18)
(13)
(31)
14
(17)
(10)
—
(10)
1
(9)
(3)
(12)
(21)
(30)
(51)
(11)
(62)
27
(35)
The components of other comprehensive earnings (loss) are reflected in Liberty’s consolidated statements of
comprehensive earnings (loss) net of taxes. The following table summarizes the tax effects related to each component of
other comprehensive earnings (loss).
Tax
Before-tax
amount
(expense) Net-of-tax
amount
benefit
amounts in millions
Year ended December 31, 2017:
Unrealized holding gains (losses) on securities arising during period . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Year ended December 31, 2016:
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2015:
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
(5)
60
55
(16)
(16)
(77)
(77)
2
(22)
(20)
6
6
28
28
(3)
38
35
(10)
(10)
(49)
(49)
(17) Commitments and Contingencies
Guarantees
In connection with agreements for the sale of assets by the Company or its subsidiaries, the Company may retain
liabilities that relate to events occurring prior to its sale, such as tax, environmental, litigation and employment matters.
The Company generally indemnifies the purchaser in the event that a third party asserts a claim against the purchaser that
relates to a liability retained by the Company. These types of indemnification obligations may extend for a number of
F-89
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
years. The Company is unable to estimate the maximum potential liability for these types of indemnification obligations
as the sale agreements may not specify a maximum amount and the amounts are dependent upon the outcome of future
contingent events, the nature and likelihood of which cannot be determined at this time. Historically, the Company has not
made any significant indemnification payments under such agreements and no amount has been accrued in the
accompanying consolidated financial statements with respect to these indemnification guarantees.
Employment Contracts
The Atlanta Braves and certain of their players and coaches have entered into long-term employment contracts
whereby such individuals’ compensation is guaranteed. Amounts due under guaranteed contracts as of December 31, 2017
aggregated $234 million, which is payable as follows: $121 million in 2018, $45 million in 2019, $32 million in 2020,
$34 million in 2021, $2 million in 2022 and none thereafter. In addition to the foregoing amounts, certain players and
coaches may earn incentive compensation under the terms of their employment contracts.
Leases
The Company leases business offices, has entered into satellite transponder lease agreements and uses certain
equipment under lease arrangements. These leases provide for minimum lease payments, additional operating expense
charges, leasehold improvements and rent escalations, and certain leases have options to renew. The effect of the rent
holidays and rent concessions are recognized on a straight-line basis over the lease term, including reasonably assured
renewal periods.
Rental expense under such agreements amounted to $58 million, $52 million and $53 million for the years ended
December 31, 2017, 2016 and 2015, respectively.
A summary of future minimum lease payments under cancelable and noncancelable operating leases, as of
December 31, 2017 follows (amounts in millions):
Years ending December 31:
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
48
50
46
39
32
165
It is expected that in the normal course of business, leases that expire generally will be renewed or replaced by
leases on other properties; thus, it is anticipated that future lease commitments will not be less than the amount shown for
2017.
Braves Holdings provided funding for the new stadium and the land during the initial construction period, until
the initial reimbursement by the Authority in September 2015, at which time the land was conveyed to the Authority.
Braves Holdings was deemed the owner (for accounting purposes) of the stadium during the construction period and costs
were classified as construction in progress (“CIP”), within the Property and equipment, net line item. Costs of the project
were captured in CIP along with a corresponding financing obligation, reported in other liabilities, for amounts funded by
the Authority. At the end of the construction period in March 2017, the Company performed an analysis and determined
that due to Braves Holdings’ continuing involvement with the property as a result of the purchase option at the end of the
lease term, the stadium did not qualify for sale-leaseback accounting treatment. Accordingly, Braves Holdings applied the
F-90
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
financing method of accounting whereby Braves Holdings began making license payments and amortizing the financing
obligation to the Authority using the effective interest rate method over a 30 year term. The stadium was reclassified from
CIP and placed into service on March 31, 2017. Also at this time, Braves Holdings began depreciating the stadium over a
45 year estimated useful life.
Programming and content
SIRIUS XM has entered into various programming agreements under which SIRIUS XM’s obligations include
fixed payments, advertising commitments and revenue sharing arrangements. Amounts due under such agreements are
payable as follows: $331 million in 2018, $306 million in 2019, $259 million in 2020, $175 million in 2021 and
$52 million in 2022. Future revenue sharing costs are dependent upon many factors and are difficult to estimate; therefore,
they are not included in the amounts above.
Litigation
The Company has contingent liabilities related to legal and tax proceedings and other matters arising in the
ordinary course of business. We record a liability when we believe that it is both probable that a liability will be incurred
and the amount of loss can be reasonably estimated. We evaluate developments in legal matters that could affect the amount
of the liability accrual and make adjustments as appropriate. Significant judgment is required to determine both probability
and the estimated amount of a loss or potential loss. We may be unable to reasonably estimate the reasonably possible loss
or range of loss for a particular legal contingency for various reasons, including, among others, because: (i) the damages
sought are indeterminate; (ii) the proceedings are in the relative early stages; (iii) there is uncertainty as to the outcome of
pending proceedings (including motions and appeals); (iv) there is uncertainty as to the likelihood of settlement and the
outcome of any negotiations with respect thereto; (v) there remain significant factual issues to be determined or resolved;
(vi) the relevant law is unsettled; or (vii) the proceedings involve novel or untested legal theories. In such instances, there
may be considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if
any. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies
will not be material in relation to the accompanying consolidated financial statements.
In connection with a commercial transaction that closed during 2002 among Liberty, Vivendi Universal S.A.
(“Vivendi”) and the former USA Holdings, Inc., Liberty brought suit against Vivendi and Universal Studios, Inc. in the
United States District Court for the Southern District of New York, alleging, among other things, breach of contract and
fraud by Vivendi. On June 25, 2012, a jury awarded Liberty damages in the amount of €765 million, plus prejudgment
interest, in connection with a finding of breach of contract and fraud by the defendants. On January 17, 2013, the court
entered judgment in favor of Liberty in the amount of approximately €945 million, including prejudgment interest. The
parties negotiated a stay of the execution of the judgment during the pendency of the appeal. Vivendi filed notice of its
appeal of the judgment to the United States Court of Appeals for the Second Circuit. During the first quarter of 2016,
Liberty entered into a settlement with Vivendi which resulted in a $775 million payment to settle all claims related to the
dispute described above. Following the payment of a contingency fee to our legal counsel, as well as amounts payable to
Liberty Global plc, an additional plaintiff in the action, Liberty recognized a net pre-tax gain on the legal settlement of
approximately $511 million. This settlement resulted in a dismissal of all appeals and mutual releases of the parties.
In August 2013, SoundExchange, Inc. (“SoundExchange”) filed a complaint in the United States District Court
for the District of Columbia (“SoundExchange I”) alleging that SIRIUS XM underpaid royalties for statutory licenses in
violation of the regulations established by the Copyright Royalty Board (“CRB”) for the 2007-2012 period.
SoundExchange principally alleges that SIRIUS XM improperly reduced its gross revenue subject to royalties by
improperly deducting revenue attributable to pre-1972 recordings and Premier package revenue that is not “separately
charged” as required by the regulations. SIRIUS XM believes that it properly applied the gross revenue exclusions
F-91
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
contained in the regulations established by the CRB. SoundExchange is seeking compensatory damages of not less than
$50 million and up to $100 million or more, payment of late fees and interest, and attorneys’ fees and costs.
In August 2014, the United States District Court for the District of Columbia in response to SIRIUS XM’s motion
to dismiss the complaint, stayed the case on the grounds that the case properly should be pursued in the first instance before
the CRB rather than the District Court. In its opinion, the District Court concluded that the gross revenue exclusions in the
regulations established by the CRB for the 2007-2012 period were ambiguous and did not, on their face, make clear
whether SIRIUS XM’s royalty calculation approaches were permissible under the regulations. In December 2014,
SoundExchange filed a petition with the CRB requesting an order interpreting the applicable regulations.
On September 11, 2017, the CRB issued a ruling concluding that SIRIUS XM correctly interpreted the revenue
exclusions applicable to pre-1972 recordings. Given the limitations on its jurisdiction, the CRB deferred to further
proceedings in the District Court the question of whether SIRIUS XM properly applied those pre-1972 revenue exclusions
when calculating its royalty payments. The Judges also concluded that SIRIUS XM improperly claimed a revenue
exclusion based on its Premier package upcharge, because, in the Judges’ view, the portion of the package that contained
programming that did not include sound recordings was not offered for a “separate charge.”
SIRIUS XM has filed a notice of appeal of this ruling to the United States Court of Appeals for the District of
Columbia Circuit. SIRIUS XM expects that the ruling by the CRB in this matter will be transmitted back to the District
Court for further proceedings, such as adjudication of claims relating to damages and defenses, although those proceedings
may be delayed pending the appeal of the Judges’ interpretative decision. SIRIUS XM believes it has substantial defenses
to those SoundExchange claims that can be asserted, including in proceedings in the District Court, and will continue to
defend this action vigorously.
This matter is captioned SoundExchange, Inc. v. Sirius XM Radio, Inc., No. 13-cv-1290-RJL (D.D.C.); the
Copyright Royalty Board referral was adjudicated under the caption Determination of Rates and Terms for Preexisting
Subscription Services and Satellite Digital Audio Radio Services, United States Copyright Royalty Board, No. 2006-1
CRB DSTRA. Information concerning SoundExchange I is publicly available in filings under the docket numbers.
On December 12, 2017, SoundExchange filed a second action against SIRIUS XM under the Copyright Act in
the United States District Court for the District of Columbia (“SoundExchange II”). This action includes claims that
SoundExchange has also attempted to add to the SoundExchange I litigation through a proposed amended complaint.
SoundExchange alleges that SIRIUS XM has systematically underpaid it for SIRIUS XM’s statutory license by
impermissibly understating SIRIUS XM’s gross revenue, as defined in the applicable regulations and, in certain cases,
understating the compensable performances of recordings on SIRIUS XM’s internet radio service. Specifically, the
complaint in SoundExchange II alleges that: from at least 2013 through the present, SIRIUS XM improperly excluded
from gross revenue a portion of SIRIUS XM’s revenue received from its Premier and All Access packages attributable to
premium channels; at least between 2010 and 2012, SIRIUS XM improperly excluded late fees received from subscribers
from the calculation of gross revenue; at least between 2010 and 2012, SIRIUS XM improperly excluded certain credits,
adjustments and bad debt for which the underlying revenue had never been included in the first instance; at least between
2010 and 2012, SIRIUS XM improperly deducted from gross revenue certain transaction fees and other expenses—for
instance, credit card processing fees, collection fees and sales and use taxes—that are not permitted by the CRB regulations;
at least between 2010 and 2012, SIRIUS XM improperly deducted amounts attributable to performances of recordings
claimed to be directly licensed on both SIRIUS XM’s satellite radio and internet radio services, even though they were
not; at least between 2010 and 2012, SIRIUS XM improperly excluded from royalty calculations performances of
recordings less than thirty seconds long under the provisions of the CRB regulations and the Webcaster Settlement
Agreement; from 2010 through 2012, SIRIUS XM excluded from royalty calculations performances of songs on its internet
radio services that SIRIUS XM claimed it was unable to identify; SIRIUS XM owes associated late fees for the previously
identified underpayments under the applicable CRB regulations; and SIRIUS XM has underpaid SoundExchange by an
F-92
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
amount exceeding 10% of the royalty payment and SIRIUS XM is therefore obligated to pay the reasonable costs of an
audit. SIRIUS XM believes that it properly applied in all material respects the regulations established by the CRB.
SoundExchange is seeking compensatory damages in an amount to be determined at trial from the alleged underpayments,
unspecified late fees and penalties pursuant to the CRB’s regulations and the Webcaster Settlement Agreement and costs,
including reasonable attorney fees and expenses.
This matter is titled SoundExchange, Inc. v. Sirius XM Radio, Inc., No. 17-cv-02666-RJL (D.D.C.). Information
concerning SoundExchange II is publicly available in filings under the docket number. As of December 31, 2017,
SIRIUS XM concluded that a loss, in excess of its recorded liabilities, was considered remote in connection with
SoundExchange I or SoundExchange II. The assumptions underlying SIRIUS XM’s conclusions may change from time to
time and the actual loss may vary from the amounts recorded.
In June 2015, SIRIUS XM settled (the “Capitol Settlement”) a separate suit brought by Capitol Records LLC
(“Capitol Records”), Sony Music Entertainment, UMG Recordings, Inc., Warner Music Group Corp. and ABKCO
Music & Records, Inc. relating to SIRIUS XM’s use and public performance of pre-1972 recordings for $210 million,
which was paid during July 2015. The settling record companies claim to own, control or otherwise have the right to settle
with respect to approximately 85% of the pre-1972 recordings SIRIUS XM has historically played. SIRIUS XM has also
entered into certain direct licenses with other owners of pre-1972 recordings, which in many cases include releases of any
claims associated with its use of pre-1972 recordings.
SIRIUS XM recognized $108 million during June 2015 for the portion of the $210 million Capitol Settlement
related to SIRIUS XM’s use of pre-1972 sound recordings for the periods prior to the Capitol Settlement during June 2015.
The $108 million expense is included in the Revenue share and royalties line item in the accompanying consolidated
financial statements for the year ended December 31, 2015 but has been excluded from Adjusted OIBDA for the
corresponding period as this expense was not incurred as a part of the Company’s normal operations for the period, and
this lump sum amount does not relate to the on-going performance of the business. SIRIUS XM recognized approximately
$43 million, $40 million and $19 million to Revenue share and royalties within the consolidated statement of operations
with respect to the Capitol Settlement subsequent to the settlement date related to SIRIUS XM’s use of pre-1972 sound
recordings during the years ended December 31, 2017, 2016 and 2015, respectively, and is included as a component of
Adjusted OIBDA.
Additionally, during the fourth quarters of 2017 and 2016, SIRIUS XM recorded $45 million and $46 million,
respectively, related to music royalty legal settlements and reserves. The expenses are included in the Revenue share and
royalties line item in the accompanying consolidated financial statements for the years ended December 31, 2017 and
2016, respectively, but have been excluded from Adjusted OIBDA for the corresponding periods as these expense were
not incurred as a part of the Company’s normal operations for the periods, and these lump sum amounts do not relate to
the on-going performance of the business.
On March 13, 2017, Thomas Buchanan, individually and on behalf of all others similarly situated, filed a class
action complaint against SIRIUS XM in the United States District Court for the Northern District of Texas, Dallas Division.
The plaintiff in this action alleges that SIRIUS XM violated the Telephone Consumer Protection Act of 1991 (the “TCPA”)
by, among other things, making telephone solicitations to persons on the National Do-Not-Call registry, a database
established to allow consumers to exclude themselves from telemarketing calls unless they consent to receive the calls in
a signed, written agreement, and making calls to consumers in violation of SIRIUS XM’s internal Do-Not-Call registry.
The plaintiff is seeking various forms of relief, including statutory damages of $500 for each violation of the TCPA or, in
the alternative, treble damages of up to $1,500 for each knowing and willful violation of the TCPA and a permanent
injunction prohibiting SIRIUS XM from making, or having made, any calls to land lines that are listed on the National Do-
Not-Call registry or SIRIUS XM’s internal Do-Not-Call registry. SIRIUS XM believes it has substantial defenses to the
claims asserted in this action, and intends to defend this action vigorously.
F-93
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
(18) Information About Liberty’s Operating Segments
The Company, through its ownership interests in subsidiaries and other companies, is primarily engaged in the
media and entertainment industries. The Company identifies its reportable segments as (A) those consolidated subsidiaries
that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B) those equity
method affiliates whose share of earnings represent 10% or more of the Company’s annual pre-tax earnings. The segment
presentation for prior periods has been conformed to the current period segment presentation, as discussed below.
The Company evaluates performance and makes decisions about allocating resources to its operating segments
based on financial measures such as revenue and Adjusted OIBDA. In addition, the Company reviews nonfinancial
measures such as subscriber growth and penetration.
The Company defines Adjusted OIBDA as revenue less operating expenses, and selling, general and
administrative expenses (excluding stock-based compensation). The Company believes this measure is an important
indicator of the operational strength and performance of its businesses, including each business’s ability to service debt
and fund capital expenditures. In addition, this measure allows management to view operating results and perform
analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This
measure of performance excludes depreciation and amortization, stock-based compensation, separately reported litigation
settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant
to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income,
net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance
with GAAP. The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third
parties, that is, at current prices.
The Company has identified the following subsidiaries as its reportable segments:
• SIRIUS XM is a consolidated subsidiary that provides a subscription based satellite radio service.
SIRIUS XM transmits music, sports, entertainment, comedy, talk, news, traffic and weather channels, as well
as infotainment services, in the United States on a subscription fee basis through its two proprietary satellite
radio systems—the Sirius system and the XM system. Subscribers can also receive music and other channels,
plus features such as SiriusXM On Demand, over SIRIUS XM’s Internet radio service, including through
applications for mobile devices, home devices and other consumer electronic equipment. SIRIUS XM also
provides connected vehicle services. SIRIUS XM’s connected vehicle services are designed to enhance the
safety, security and driving experience for vehicle operators while providing marketing and operational
benefits to automakers and their dealers.
• Formula 1 is a global motorsports business that holds exclusive commercial rights with respect to the World
Championship, an annual, approximately nine-month long, motor race-based competition in which teams
compete for the Constructors’ Championship and drivers compete for the Drivers’ Championship. The World
Championship takes place on various circuits with a varying number of events taking place in different
countries around the world each season. Formula 1 is responsible for the commercial exploitation and
development of the World Championship as well as various aspects of its management and administration.
The Company acquired a controlling interest in Formula 1 on January 23, 2017, at which time it began
consolidating the results of the Formula 1 business.
The Company’s reportable segments are strategic business units that offer different products and services. They
are managed separately because each segment requires different technologies, distribution channels and marketing
strategies. The accounting policies of the segments that are also consolidated subsidiaries are the same as those described
in the Company’s summary of significant policies.
F-94
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
Performance Measures
Years ended December 31,
2017
Adjusted
OIBDA
Revenue
2016
Adjusted
2015
Adjusted
Revenue OIBDA
Revenue OIBDA
amounts in millions
Liberty SiriusXM Group
SIRIUS XM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,425
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
5,425
Total Liberty SiriusXM Group . . . . . . . . . . . . . . . . .
2,109
(15)
2,094
5,014
—
5,014
1,853
(15)
1,838
4,552
—
4,552
1,660
—
1,660
Braves Group
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . . . . . . . . . . . . . . . .
386
386
2
2
262
262
(20)
(20)
243
243
3
3
Formula One Group
Formula 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . . . . . . . . . . . . . . . .
1,783
—
1,783
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,594
438
(41)
397
2,493
—
—
—
5,276
—
(45)
(45)
1,773
—
—
—
4,795
—
(35)
(35)
1,628
Other Information
Total
assets
December 31, 2017
Investments Capital
in affiliates expenditures
Total
assets
December 31, 2016
Investments Capital
in affiliates expenditures
Liberty SiriusXM Group
SIRIUS XM . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,837
Corporate and other . . . . . . . . . . . . . . . . . .
693
28,530
Total Liberty SiriusXM Group . . . . . . . .
Braves Group
Corporate and other . . . . . . . . . . . . . . . . . .
Total Braves Group . . . . . . . . . . . . . . . . .
1,866
1,866
Formula One Group
Formula 1. . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . .
Total Formula One Group . . . . . . . . . . . .
Elimination (1) . . . . . . . . . . . . . . . . . . . . . . . .
9,461
2,341
11,802
(202)
Consolidated Liberty . . . . . . . . . . . . . . . $ 41,996
672
—
672
145
145
—
933
933
—
1,750
amounts in millions
288 26,978
73
27,051
—
288
219
219
1,548
1,548
8
2
10
—
NA
2,995
2,995
(217)
517 31,377
164
—
164
61
61
NA
892
892
—
1,117
206
—
206
360
360
NA
2
2
—
568
(1) This is primarily the intergroup interest in the Braves Group held by the Formula One Group, as discussed in note 2.
The intergroup interest attributable to the Formula One Group is presented as an asset and the intergroup interest
attributable to the Braves Group is presented as a liability in the attributed financial statements and the offsetting
amounts between tracking stock groups are eliminated in consolidation.
F-95
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
The following table provides a reconciliation of consolidated segment Adjusted OIBDA to earnings (loss) from
continuing operations before income taxes:
Years ended December 31,
2017
2016
2015
amounts in millions
Consolidated segment Adjusted OIBDA . . . . . . . . . . . . . . . . . . . $ 2,493
(45)
Legal settlement (note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(230)
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(824)
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,394
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(591)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104
Share of earnings (losses) of affiliates, net . . . . . . . . . . . . . . . . .
Realized and unrealized gains (losses) on financial instruments,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(88)
8
1,773
465
(150)
(354)
1,734
(362)
14
1,628
(108)
(204)
(362)
954
(328)
(40)
37
(4)
(140)
12
Earnings (loss) from continuing operations before income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
827
1,419
458
Revenue by Geographic Area
Revenue by geographic area based on the country of domicile is as follows:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-lived Assets by Geographic Area
Years ended December 31,
2017
2016
2015
amounts in millions
$
$
5,724
1,783
87
7,594
5,230
—
46
5,276
4,739
—
56
4,795
December 31,
2016
2017
amounts in millions
2,529
12
2,541
2,352
—
2,352
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
F-96
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
(19) Quarterly Financial Information (Unaudited)
1st
Quarter
2nd
Quarter Quarter Quarter
3rd
4th
amounts in millions,
except per share amounts
2017:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,395 2,140 2,065
382
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 259
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
261
44
Net earnings (loss) attributable to Liberty stockholders:
422
156
Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 124
Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (49)
Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (96)
123
(2)
(27)
183
22
(37)
Basic net earnings (loss) attributable to Liberty stockholders per common
share:
Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.37
Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1.00)
Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.55)
0.37
(0.04)
(0.13)
0.54
0.45
(0.17)
Diluted net earnings (loss) attributable to Liberty stockholders per common
share:
Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.37
Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1.00)
Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.55)
0.36
(0.04)
(0.13)
0.54
0.45
(0.17)
1,994
331
1,429
694
4
415
2.07
0.08
1.80
2.04
0.07
1.79
F-97
LIBERTY MEDIA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 31, 2017, 2016 and 2015
1st
Quarter
2nd
3rd
Quarter Quarter Quarter
4th
amounts in millions,
except per share amounts
2016:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,204
781
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
427
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net earnings (loss) attributable to Liberty stockholders:
Liberty Media Corporation common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
364
Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ NA
Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ NA
Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ NA
Basic net earnings (loss) attributable to Liberty stockholders per common
share:
1,366
328
142
1,385
352
169
1,321
273
186
13
82
32
(45)
NA
96
(22)
41
NA
119
(40)
40
Liberty Media Corporation common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.09
Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ NA
Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ NA
Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ NA
0.04
0.24
0.89
(0.54)
NA
0.29
(0.45)
0.49
Diluted net earnings (loss) attributable to Liberty stockholders per common
share:
Liberty Media Corporation common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.08
Liberty SiriusXM common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ NA
Liberty Braves common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ NA
Liberty Formula One common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ NA
0.04
0.24
0.11
(0.54)
NA
0.28
(0.45)
0.48
NA
0.36
(0.82)
0.48
NA
0.35
(0.82)
0.47
F-98
Unaudited Attributed Financial Information for Tracking Stock Groups
During November 2015, Liberty Media Corporation’s (“Liberty”) board of directors authorized management to
pursue a reclassification of the Company’s common stock into three new tracking stock groups, one to be designated as
the Liberty Braves tracking stock, one to be designated as the Liberty Media tracking stock and one to be designated as
the Liberty SiriusXM tracking stock (the “Recapitalization”), and to cause to be distributed subscription rights related to
the Liberty Braves tracking stock following the creation of the new tracking stocks. The Recapitalization was completed
on April 15, 2016 and the newly issued shares commenced trading or quotation in the regular way on the Nasdaq Global
Select Market or the OTC Markets, as applicable, on Monday, April 18, 2016. Shortly following the completion of the
second closing of the acquisition of Formula 1 on January 23, 2017, the Liberty Media Group was renamed the Liberty
Formula One Group. Historical information of the Liberty Media Group and Liberty Media common stock is referred to
herein as the Formula One Group and Liberty Formula One common stock, respectively.
The following tables present our assets and liabilities as of December 31, 2017 and December 31, 2016 and
revenue, expenses and cash flows for the years ended December 31, 2017, 2016, and 2015. The tables further present our
assets, liabilities, revenue, expenses and cash flows that are attributed to the Liberty SiriusXM Group, Braves Group and
the Formula One Group, respectively. The financial information should be read in conjunction with our consolidated
financial statements for the year ended December 31, 2017 included in this Annual Report.
The attributed financial information presented herein has been prepared assuming this attribution had been
completed as of January 1, 2014. However, this attribution of historical financial information does not purport to be what
actual results and balances would have been if such attribution had actually occurred and been in place during these periods.
Therefore, the attributed net earnings (losses) presented in the unaudited attributed financial information are not the same
as the net earnings (losses) reflected in the Liberty consolidated financial statements included in this Annual Report. The
net earnings (losses) attributed to the Liberty SiriusXM common stock, Liberty Braves common stock and Liberty Formula
One common stock for purposes of those financial statements only relates to the period after the Recapitalization.
Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to the Liberty
SiriusXM Group, Braves Group and the Formula One Group, our tracking stock capital structure does not affect the
ownership or the respective legal title to our assets or responsibility for our liabilities. We and our subsidiaries are each
responsible for our respective liabilities. Holders of Liberty SiriusXM common stock, Liberty Braves common stock and
Liberty Formula One common stock are holders of our common stock and are subject to risks associated with an investment
in our company and all of our businesses, assets and liabilities. The issuance of Liberty SiriusXM common stock, Liberty
Braves common stock and Liberty Formula One common stock does not affect the rights of our creditors.
F-99
SUMMARY ATTRIBUTED FINANCIAL DATA
Liberty SiriusXM Group
Summary Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Investments in affiliates, accounted for using the equity method . . . . $
Intangible assets not subject to amortization . . . . . . . . . . . . . . . . . . . . . $
Intangible assets subject to amortization, net . . . . . . . . . . . . . . . . . . . . $
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term debt, including current portion . . . . . . . . . . . . . . . . . . . . . . $
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Attributed net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Summary Statement of Operations Data:
December 31,
2017
December 31,
2016
amounts in millions
615
672
23,778
972
28,530
1,882
7,496
1,447
10,861
5,615
287
164
23,695
998
27,051
1,833
6,107
1,967
10,085
5,945
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of subscriber services (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscriber acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expense (1) . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) attributable to noncontrolling interests . . . . .
Earnings (loss) attributable to Liberty stockholders . . . . . . . . . . .
(1) Includes stock-based compensation expense as follows:
Cost of subscriber services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expense . . . . . . . . . . . . . . . . .
Years ended December 31,
2017
2016
amounts in millions
2015
5,425
(2,102)
(499)
(113)
(812)
1,547
(356)
466
535
1,124
5,014
(1,994)
(513)
(82)
(761)
1,352
(342)
(341)
244
413
4,552
(1,823)
(533)
(73)
(728)
1,073
(307)
(322)
184
259
Years ended December 31,
2017
2016
amounts in millions
2015
36
16
98
150
30
13
85
128
32
18
107
157
$
$
$
$
$
$
$
$
$
$
$
$
F-100
Braves Group
Summary Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Investments in affiliates, accounted for using the equity method . . . . . $
Intangible assets not subject to amortization . . . . . . . . . . . . . . . . . . . . . . $
Intangible assets subject to amortization, net . . . . . . . . . . . . . . . . . . . . . $
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term debt, including current portion . . . . . . . . . . . . . . . . . . . . . . . $
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Attributed net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Summary Statement of Operations Data:
December 31,
2017
December 31,
2016
amounts in millions
132
1,099
145
323
49
1,866
51
662
62
413
107
930
61
323
73
1,548
44
328
48
385
Years ended December 31,
2017
2016
amounts in millions
2015
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expense (1) . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of earnings (losses) of affiliates, net . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) attributable to Liberty stockholders . . . . . . . . . . .
$
$
$
$
$
$
386
(151)
(113)
78
36
(25)
262
(67)
(61)
9
17
(62)
243
(61)
(38)
9
10
(20)
(1) Includes stock-based compensation of $48 million, $9 million, and $10 million for the years ended December 31,
2017, 2016 and 2015, respectively.
F-101
Formula One Group
Summary Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Investments in available for sale securities and other cost
investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Investments in affiliates, accounted for using the equity method . . $
Intangible assets not subject to amortization . . . . . . . . . . . . . . . . . . . $
Intangible assets subject to amortization, net . . . . . . . . . . . . . . . . . . $
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term debt, including current portion . . . . . . . . . . . . . . . . . . . . $
Attributed net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Summary Statement of Operations Data:
December 31,
2017
December 31,
2016
amounts in millions
282
526
933
3,956
5,110
11,802
5,796
5,669
168
1,301
892
—
1
2,995
1,583
1,286
Years ended December 31,
2017
2016
amounts in millions
2015
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cost of Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Selling, general and administrative expense (1) . . . . . . . . . . . . . . . $
Legal settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Share of earnings (losses) of affiliates, net . . . . . . . . . . . . . . . . . . . $
Realized and unrealized gains (losses) on financial instruments,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Earnings (loss) attributable to Liberty stockholders . . . . . . . . . . . . $
1,783
1,219
(199)
—
(40)
(220)
(3)
(72)
561
255
—
—
(58)
511
443
(19)
(8)
36
(171)
329
—
—
(72)
—
(81)
(20)
(48)
(140)
102
(175)
(1) Includes stock-based compensation of $32 million, $13 million, and $37 million for the years ended December 31,
2017, 2016, and 2015, respectively.
F-102
BALANCE SHEET INFORMATION
December 31, 2017
(unaudited)
Attributed (note 1)
Liberty
SiriusXM
Group
Braves
Group
Formula One Inter-Group Consolidated
Group
Eliminations Liberty
amounts in millions
Assets
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Trade and other receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup interest in the Braves Group (note 1) . . . . . . . . . . . . . . . .
Investments in available-for-sale securities and other cost
investments (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in affiliates, accounted for using the equity method
(note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets not subject to amortization
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FCC licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets subject to amortization, net . . . . . . . . . . . . . . . . . .
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
615
242
207
1,064
—
580
672
2,274
(927)
1,347
14,247
8,600
931
23,778
972
117
28,530
Liabilities and Equity
Current liabilities:
Intergroup payable (receivable) (note 4) . . . . . . . . . . . . . . . . . . . . $
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . .
Current portion of debt (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax liabilities (note 3) . . . . . . . . . . . . . . . . . . . . . .
Redeemable intergroup interest (note 1) . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity / Attributed net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests in equity of subsidiaries . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
9
934
755
1,882
3
3,583
6,741
1,447
—
283
12,054
10,861
5,615
28,530
132
32
56
220
—
8
145
1,150
(51)
1,099
180
—
143
323
49
22
1,866
(39)
58
13
51
8
91
649
62
202
435
1,439
413
14
1,866
282
84
113
479
202
526
933
172
(77)
95
3,956
—
—
3,956
5,110
501
11,802
30
258
—
8
9
305
5,796
(31)
—
61
6,131
5,669
2
11,802
—
—
—
—
(202)
—
—
—
—
—
—
—
—
—
—
—
(202)
—
—
—
—
—
—
—
—
(202)
—
(202)
—
—
(202)
1,029
358
376
1,763
—
1,114
1,750
3,596
(1,055)
2,541
18,383
8,600
1,074
28,057
6,131
640
41,996
—
1,250
768
1,941
20
3,979
13,186
1,478
—
779
19,422
16,943
5,631
41,996
F-103
BALANCE SHEET INFORMATION
December 31, 2016
(unaudited)
Attributed (note 1)
Liberty
SiriusXM Braves Formula One Inter-Group Consolidated
Group
Eliminations
Group
Liberty
Group
amounts in millions
107
15
17
139
—
8
61
943
(13)
930
180
—
143
323
73
14
1,548
(17)
141
—
44
—
168
328
48
187
417
1,148
385
15
1,548
168
2
5
175
187
1,301
892
160
(71)
89
—
—
—
—
1
350
2,995
12
16
—
—
3
31
1,583
39
—
56
1,709
1,286
—
2,995
—
—
(1)
(1)
(187)
—
—
—
—
—
—
—
—
—
—
(29)
(217)
—
—
—
—
(1)
(1)
—
(29)
(187)
—
(217)
—
—
(217)
562
240
227
1,029
—
1,309
1,117
3,182
(830)
2,352
14,345
8,600
1,073
24,018
1,072
480
31,377
—
985
5
1,877
5
2,872
8,013
2,025
—
751
13,661
11,756
5,960
31,377
Assets
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Trade and other receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup interest in the Braves Group (note 1) . . . . . . . . . . . . . . . . . . . . . . .
Investments in available-for-sale securities and other cost investments (note 1) .
Investments in affiliates, accounted for using the equity method (note 1) . . . .
287
223
206
716
—
—
164
Property and equipment, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,079
(746)
1,333
Intangible assets not subject to amortization
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FCC licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,165
8,600
930
23,695
998
145
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,051
Intangible assets subject to amortization, net . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and Equity
Current liabilities:
Intergroup payable (receivable) (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of debt (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax liabilities (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable intergroup interest (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
828
5
1,833
3
2,674
6,102
1,967
—
278
11,021
Equity / Attributed net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,085
5,945
Noncontrolling interests in equity of subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,051
F-104
STATEMENT OF OPERATIONS INFORMATION
December 31, 2017
(unaudited)
Attributed (note 1)
Liberty
SiriusXM
Group
Braves
Group
Formula One
Group
Consolidated
Liberty
amounts in millions
Revenue:
Subscriber revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating costs and expenses, including stock-based
compensation (note 2):
$
Cost of subscriber services (exclusive of depreciation shown
separately below):
Revenue share and royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Programming and content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer service and billing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of Formula 1 revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscriber acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of earnings (losses) of affiliates, net . . . . . . . . . . . . . . . . . . .
Unrealized gain/(loss) on inter-group interest . . . . . . . . . . . . . . . . .
Realized and unrealized gains (losses) on financial instruments,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit (note 3) . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less net earnings (loss) attributable to the noncontrolling
interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) attributable to Liberty stockholders . . . . . . . . . . . . .
$
4,473
—
952
5,425
—
—
386
386
1,210
388
385
119
—
499
113
812
352
3,878
1,547
(356)
29
—
(16)
(11)
(354)
1,193
466
1,659
535
1,124
—
—
—
—
—
—
281
151
67
499
(113)
(15)
78
(15)
—
3
51
(62)
36
(26)
(1)
(25)
—
1,783
—
1,783
—
—
—
—
1,219
—
—
199
405
1,823
(40)
(220)
(3)
15
(72)
16
(264)
(304)
561
257
2
255
4,473
1,783
1,338
7,594
1,210
388
385
119
1,219
499
394
1,162
824
6,200
1,394
(591)
104
—
(88)
8
(567)
827
1,063
1,890
536
1,354
F-105
STATEMENT OF OPERATIONS INFORMATION
December 31, 2016
(unaudited)
Revenue:
Subscriber revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating costs and expenses, including stock-based
compensation (note 2):
Cost of subscriber services (exclusive of depreciation
shown separately below):
Revenue share and royalties . . . . . . . . . . . . . . . . . . . . . . .
Programming and content . . . . . . . . . . . . . . . . . . . . . . . . .
Customer service and billing . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscriber acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . .
Legal settlement, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of earnings (losses) of affiliates, net . . . . . . . . . . . .
Unrealized gain/(loss) on inter-group interest . . . . . . . . .
Realized and unrealized gains (losses) on financial
instruments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) before income taxes . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit (note 3) . . . . . . . . . . . . . . . . .
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less net earnings (loss) attributable to the
noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) attributable to Liberty stockholders . . . . $
Attributed (note 1)
Liberty
SiriusXM
Group
Braves
Group
Formula One Consolidated
Group
Liberty
amounts in millions
4,194
820
5,014
—
262
262
—
—
—
4,194
1,082
5,276
1,109
354
387
144
513
82
761
—
312
3,662
1,352
(342)
13
—
—
(25)
(354)
998
(341)
657
244
413
—
—
—
—
—
224
67
—
32
323
(61)
(1)
9
(27)
1
—
(18)
(79)
17
(62)
—
(62)
—
—
—
—
—
—
58
(511)
10
(443)
443
(19)
(8)
27
36
21
57
500
(171)
329
—
329
1,109
354
387
144
513
306
886
(511)
354
3,542
1,734
(362)
14
—
37
(4)
(315)
1,419
(495)
924
244
680
F-106
STATEMENT OF OPERATIONS INFORMATION
December 31, 2015
(unaudited)
Attributed (note 1)
Liberty
SiriusXM
Group
Braves
Group
Formula One Consolidated
Group
amounts in millions
Liberty
Revenue:
Subscriber revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating costs and expenses, including stock-based
compensation (note 2):
Cost of subscriber services (exclusive of depreciation
shown separately below):
Revenue share and royalties . . . . . . . . . . . . . . . . . . . . . . . . . .
Programming and content . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer service and billing . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subscriber acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of earnings (losses) of affiliates, net . . . . . . . . . . . . . . .
Realized and unrealized gains (losses) on financial
instruments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit (note 3) . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less net earnings (loss) attributable to the noncontrolling
interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net earnings (loss) attributable to Liberty stockholders . . . . . . . $
3,807
745
4,552
—
243
243
—
—
—
3,807
988
4,795
1,035
267
380
141
533
73
728
322
3,479
1,073
(307)
(1)
—
—
(308)
765
(322)
443
184
259
—
—
—
—
—
189
61
31
281
(38)
(1)
9
—
—
8
(30)
10
(20)
—
(20)
—
—
—
—
—
—
72
9
81
(81)
(20)
(48)
(140)
12
(196)
(277)
102
(175)
—
(175)
1,035
267
380
141
533
262
861
362
3,841
954
(328)
(40)
(140)
12
(496)
458
(210)
248
184
64
F-107
STATEMENT OF CASH FLOWS INFORMATION
December 31, 2017
(unaudited)
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of (earnings) loss of affiliates, net . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (gains) losses on intergroup interest, net . . . . . . . . . . . . . . . . .
Realized and unrealized (gains) losses on financial instruments, net . . . . .
Noncash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses (gains) on dilution of investment in affiliate . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup tax allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup tax (payments) receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other charges (credits), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities
Current and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by operating activities . . . . . . . . . . . . . . .
Cash flows from investing activities:
Cash proceeds from dispositions of investments . . . . . . . . . . . . . . . . . . .
Net cash paid for the acquisition of Formula 1 . . . . . . . . . . . . . . . . . . . . .
Investments in and loans to cost and equity investees . . . . . . . . . . . . . . . .
Capital expended for property and equipment . . . . . . . . . . . . . . . . . . . . .
Other investing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by investing activities . . . . . . . . . . . . . . .
Cash flows from financing activities:
Borrowings of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of Series C Liberty Formula One common
stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares repurchased by subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid by subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes paid in lieu of shares issued for stock-based compensation . . . . . . .
Other financing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by financing activities . . . . . . . . . . . . . . .
Effect of foreign exchange rates on cash and cash equivalents . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . .
Attributed (note 1)
Liberty
SiriusXM
Group
Braves
Group
Formula One Consolidated
Group
Liberty
amounts in millions
$
1,659
(26)
257
1,890
352
150
(29)
—
16
7
—
35
(492)
(6)
4
(4)
30
127
1,849
—
—
(851)
(288)
(115)
(1,254)
4,553
(3,216)
—
(1,409)
(60)
(100)
(35)
(267)
—
328
287
615
$
67
48
(78)
15
—
3
—
5
2
(39)
15
18
(57)
(15)
(42)
5
—
(2)
(219)
(5)
(221)
544
(218)
—
—
—
(30)
(8)
288
—
25
107
132
405
32
3
(15)
72
6
(3)
8
(574)
45
(19)
(10)
77
(359)
(75)
16
(1,647)
(9)
(10)
(12)
(1,662)
1,600
(1,673)
1,938
—
—
(5)
(13)
1,847
4
114
168
282
824
230
(104)
—
88
16
(3)
48
(1,064)
—
—
4
50
(247)
1,732
21
(1,647)
(862)
(517)
(132)
(3,137)
6,697
(5,107)
1,938
(1,409)
(60)
(135)
(56)
1,868
4
467
562
1,029
F-108
STATEMENT OF CASH FLOWS INFORMATION
December 31, 2016
(unaudited)
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of (earnings) loss of affiliates, net . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (gains) losses on intergroup interest, net . . . . . . . . . . . . . . . .
Realized and unrealized (gains) losses on financial instruments,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup tax allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup tax (payments) receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other charges (credits), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities
Current and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by operating activities . . . . . . . . . . . . . .
Cash flows from investing activities:
Cash proceeds from dispositions of investments . . . . . . . . . . . . . . . . . .
Proceeds (payments) from settlement of financial instruments,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in and loans to cost and equity investees . . . . . . . . . . . . . . .
Repayment of loans and other cash receipts from cost and equity
investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expended for property and equipment . . . . . . . . . . . . . . . . . . . .
Purchases of short term investments and other marketable
securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of short term investments and other marketable securities . . . . . . .
Other investing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by investing activities . . . . . . . . . . . . . .
Cash flows from financing activities:
Borrowings of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup (payments) receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares repurchased by subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Braves Rights Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid by subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes paid in lieu of shares issued for stock-based
compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by financing activities . . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . .
Attributed (note 1)
Liberty
SiriusXM
Group
Braves
Group
Formula One Consolidated
Group
Liberty
amounts in millions
$
657
(62)
329
924
312
128
(13)
—
—
6
24
332
(13)
7
21
59
184
1,704
—
—
—
—
(206)
—
—
(4)
(210)
1,847
(1,471)
58
(1,674)
—
(16)
(47)
(16)
(1,319)
175
112
287
$
32
9
(9)
27
(1)
5
—
1
(19)
7
11
(17)
105
89
—
—
(20)
—
(360)
—
—
(33)
(413)
460
(276)
16
—
203
—
—
15
418
94
13
107
10
13
8
(27)
(36)
—
—
94
32
(14)
(2)
(17)
(12)
378
62
(1)
(764)
48
(2)
(258)
273
1
(641)
438
(2)
(74)
—
—
—
(11)
4
355
92
76
168
354
150
(14)
—
(37)
11
24
427
—
—
30
25
277
2,171
62
(1)
(784)
48
(568)
(258)
273
(36)
(1,264)
2,745
(1,749)
—
(1,674)
203
(16)
(58)
3
(546)
361
201
562
F-109
STATEMENT OF CASH FLOWS INFORMATION
December 31, 2015
(unaudited)
Attributed (note 1)
Liberty
SiriusXM
Group
Formula One Consolidated
Liberty
Braves
Group
amounts in millions
Group
$
443
(20)
(175)
248
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of (earnings) loss of affiliates, net . . . . . . . . . . . . . . . . . . . . . . . . .
Realized and unrealized (gains) losses on financial instruments,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses (gains) on dilution of investments in affiliate . . . . . . . . . . . . . . . .
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup tax allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup tax (payments) receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other charges (credits), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities
Current and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payables and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by operating activities . . . . . . . . . . . . . . .
Cash flows from investing activities:
Cash proceeds from dispositions of investments . . . . . . . . . . . . . . . . . . .
Proceeds (payments) from settlement of financial instruments, net . . . . . .
Investments in and loans to cost and equity investments . . . . . . . . . . . . .
Capital expended for property and equipment . . . . . . . . . . . . . . . . . . . . .
Purchases of short term investments and other marketable
securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of short term investments and other marketable securities . . . . . . . .
Other investing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by investing activities. . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
Borrowings of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intergroup (payments) receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of Liberty common stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares repurchased by subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes paid in lieu of shares issued for stock-based compensation . . . . . . .
Other financing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided (used) by financing activities . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . .
$
F-110
322
157
1
—
6
—
290
(4)
—
15
(220)
212
1,222
—
—
—
(135)
—
—
—
(135)
1,978
(1,038)
9
—
(2,018)
(54)
—
(1,123)
(36)
148
112
31
10
(9)
—
—
—
(6)
(4)
1
—
9
33
45
24
—
—
(128)
—
—
(9)
(113)
197
(158)
31
—
—
—
—
70
2
11
13
9
37
48
140
—
1
(109)
8
(1)
4
3
—
(35)
151
(322)
(19)
(33)
(174)
358
1
(38)
38
—
(40)
(350)
—
(26)
5
(373)
(446)
522
76
362
204
40
140
6
1
175
—
—
19
(208)
245
1,232
175
(322)
(19)
(296)
(174)
358
(8)
(286)
2,213
(1,196)
—
(350)
(2,018)
(80)
5
(1,426)
(480)
681
201
Notes to Attributed Financial Information (Continued)
(unaudited)
(1) As discussed above and in note 2 the accompanying consolidated financial statements, on April 15, 2016 Liberty
completed a recapitalization of Liberty Media Corporation’s (“Liberty” or the “Company”) common stock into
three new tracking stock groups, one designated as the Liberty Braves common stock, one designated as the Liberty
Media common stock and one designated as the Liberty SiriusXM common stock (the “Recapitalization”). Upon
completion of the Second Closing of the acquisition of Formula 1 on January 23, 2017, as discussed below, the
Liberty Media Group was renamed the Liberty Formula One Group (the “Formula One Group”).
A tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic
performance of a particular business or "group," rather than the economic performance of the company as a whole.
While the Liberty SiriusXM Group, Braves Group and Formula One Group have separate collections of businesses,
assets and liabilities attributed to them, no group is a separate legal entity and therefore cannot own assets, issue
securities or enter into legally binding agreements. Therefore, the Liberty SiriusXM Group, Braves Group and
Formula One Group do not represent separate legal entities, but rather represent those businesses, assets and
liabilities that have been attributed to each respective group. Holders of tracking stock have no direct claim to the
group's stock or assets and therefore, do not own, by virtue of their ownership of a Liberty tracking stock, any equity
or voting interest in a company, such as Sirius XM Holdings Inc. (“SIRIUS XM”), Formula 1 or Live Nation
Entertainment, Inc. (“Live Nation”), in which Liberty holds an interest and that is attributed to a Liberty tracking
stock group, such as the Liberty SiriusXM Group or the Formula One Group. Holders of tracking stock are also not
represented by separate boards of directors. Instead, holders of tracking stock are stockholders of the parent
corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation.
The Liberty SiriusXM Group is comprised of our consolidated subsidiary, SIRIUS XM, corporate cash and its
margin loan obligation incurred by a wholly-owned special purpose subsidiary of Liberty. As of December 31,
2017, the Liberty SiriusXM Group has cash and cash equivalents of approximately $615 million, which includes
$69 million of subsidiary cash.
The Braves Group is comprised of our consolidated subsidiary, Braves Holdings, LLC (“Braves Holdings”), which
indirectly owns the Atlanta Braves Major League Baseball Club (“ANLBC”) and certain assets and liabilities
associated with ANLBC’s stadium and mixed use development project (the “Development Project”) and cash. Also
upon the Recapitalization, Liberty had attributed to the Braves Group all liabilities arising under a note obligation
from Braves Holdings to Liberty, with a total borrowing capacity of up to $165 million by Braves Holdings (the
“Intergroup Note”) relating to funds borrowed and used for investment in the Development Project. $150 million
was outstanding under the Intergroup Note which was repaid during June 2016 using proceeds from the subscription
rights offering (as described in more detail below), and the Intergroup Note agreement was cancelled. The remaining
proceeds from the rights offering were attributed to the Braves Group. As of December 31, 2017, the Braves Group
has cash and cash equivalents of approximately $132 million, which includes $55 million of subsidiary cash.
Additionally, as discussed below, the Formula One Group retains an intergroup interest in the Braves Group.
The Formula One Group is comprised of all of the businesses, assets and liabilities of Liberty other than those
specifically attributed to the Liberty SiriusXM Group or the Braves Group, including, as of December 31, 2017,
Liberty’s interests in Formula 1 and Live Nation, a minority equity investment in Time Warner Inc. (“Time
Warner”), the Intergroup Note, the recovery received in connection with the Vivendi lawsuit, cash, an intergroup
interest in the Braves Group as well as Liberty’s 1.375% Cash Convertible Notes due 2023 and related financial
instruments, Liberty’s 1% Cash Convertible Notes due 2023 and Liberty’s 2.25% Exchangeable Senior Debentures
due 2046. As discussed in more detail in note 2, on September 7, 2016 Liberty, through its indirect wholly owned
subsidiary Liberty GR Cayman Acquisition Company, entered into two definitive stock purchase agreements
relating to the acquisition of Delta Topco Limited (“Delta Topco”), the parent company of Formula 1, a global
motorsports business. The transactions contemplated by the first purchase agreement were completed on September
7, 2016 and provided for the acquisition of slightly less than a 20% minority stake in Formula 1 on an undiluted
basis. On October 27, 2016 under the terms of the first purchase agreement, Liberty acquired an additional
incremental equity interest of Delta Topco, maintaining Liberty’s investment in Delta Topco on an undiluted basis
and increasing slightly to 19.1% on a fully diluted basis. Liberty’s interest in Delta Topco and by extension Formula
1 is attributed to the Formula One Group. Liberty acquired 100% of the fully diluted equity interests of Delta Topco,
other than a nominal number of
F-111
Notes to Attributed Financial Information (Continued)
(unaudited)
shares held by certain Formula 1 teams, in a closing under the second purchase agreement (and following the unwind
of the first purchase agreement) on January 23, 2017 (the “Second Closing”). Liberty’s acquired interest in Formula
1, along with existing Formula 1 cash and debt (which is non-recourse to Liberty), was attributed to the Formula
One Group upon completion of the Second Closing. As of December 31, 2017, the Formula One Group has cash
and cash equivalents of approximately $282 million, which includes $165 million of subsidiary cash.
Following the creation of the new tracking stocks, Liberty distributed to holders of its Liberty Braves common stock
subscription rights to acquire shares of Series C Liberty Braves common stock to raise capital to repay the
Intergroup Note and for working capital purposes. In the rights distribution, Liberty distributed 0.47 of a Series C
Liberty Braves subscription right for each share of Series A, Series B or Series C Liberty Braves common stock
held as of 5:00 p.m., New York City time, on May 16, 2016. Fractional Series C Liberty Braves subscription rights
were rounded up to the nearest whole right. Each whole Series C Liberty Braves subscription right entitled the
holder to purchase, pursuant to the basic subscription privilege, one share of Liberty’s Series C Liberty Braves
common stock at a subscription price of $12.80, which was equal to an approximate 20% discount to the trading
day volume weighted average trading price of Liberty’s Series C Liberty Braves common stock for the 18-day
trading period ending on May 11, 2016. Each Series C Liberty Braves subscription right also entitled the holder to
subscribe for additional shares of Series C Liberty Braves common stock that were unsubscribed for in the rights
offering pursuant to an oversubscription privilege. The rights offering commenced on May 18, 2016, which was
also the ex-dividend date for the distribution of the Series C Liberty Braves subscription rights. The rights offering
expired at 5:00 p.m. New York City time, on June 16, 2016 and was fully subscribed with 15,833,634 shares of
Series C Liberty Braves common stock issued to those rightsholders exercising basic and, if applicable,
oversubscription privileges. Approximately $150 million of the proceeds from the rights offering were used to repay
the amount outstanding on the Intergroup Note and accrued interest to Liberty. The remaining proceeds will be used
for future development costs attributed to the Braves Group. In September 2016, the Internal Revenue Service
completed its review of the distribution of the Series C Liberty Braves rights offering and notified Liberty that it
agreed with the nontaxable characterization of the distribution.
As part of the Recapitalization, the Formula One Group initially held a 20% intergroup interest in the Braves Group.
As a result of the rights offering, the number of notional shares underlying the intergroup interest was adjusted to
9,084,940, representing a 15.1% intergroup interest in the Braves Group as of December 31, 2017. The intergroup
interest is a quasi-equity interest which is not represented by outstanding shares of common stock; rather, the
Formula One Group has an attributed value in the Braves Group which is generally stated in terms of a number of
shares of stock issuable to the Formula One Group with respect to its interest in the Braves Group. Each reporting
period, the notional shares representing the intergroup interest are marked to fair value. The change in fair value is
recorded in the Unrealized gain (loss) on intergroup interest line item in the unaudited attributed consolidated
statements of operations. The Formula One Group’s intergroup interest is reflected in the Investment in intergroup
interest line item, and the Braves Group liability for the intergroup interest is reflected in the Redeemable intergroup
interest line item in the unaudited attributed consolidated balance sheets. Both accounts are presented as noncurrent,
as there are currently no plans for the settlement of the intergroup interest. Appropriate eliminating entries are
recorded in the Company’s consolidated financial statements.
As the notional shares underlying the intergroup interest are not represented by outstanding shares of common
stock, such shares have not been officially designated Series A, B or C Liberty Braves common stock. However,
Liberty has assumed that the notional shares (if and when issued) would be comprised of Series C Liberty Braves
common stock in order to not dilute voting percentages. Therefore, the market price of Series C Liberty Braves
common stock is used for the quarterly mark-to-market adjustment through the unaudited attributed consolidated
statements of operations.
The intergroup interest will remain outstanding until the redemption of the outstanding interest, at the discretion of
the Company’s board of directors, through transfer of securities, cash and/or other assets from the Braves Group to
the Formula One Group.
F-112
Notes to Attributed Financial Information (Continued)
(unaudited)
For information relating to investments in available for sale securities and other cost investments, investments in
affiliates accounted for using the equity method and debt, see notes 7, 8 and 10, respectively, of the accompanying
consolidated financial statements.
(2) Cash compensation expense for our corporate employees is allocated among the Liberty SiriusXM Group, Braves
Group and the Formula One Group based on the estimated percentage of time spent providing services for each
group. On an annual basis estimated time spent will be determined through an interview process and a review of
personnel duties unless transactions significantly change the composition of companies and investments in either
respective group which would require a timelier reevaluation of estimated time spent. Other general and
administrative expenses are charged directly to the groups whenever possible and are otherwise allocated based on
estimated usage or some other reasonably determined methodology. Following the Recapitalization, stock
compensation related to each tracking stock is calculated based on actual awards outstanding.
While we believe that this allocation method is reasonable and fair to each group, we may elect to change the
allocation methodology or percentages used to allocate general and administrative expenses in the future.
(3) We have accounted for income taxes for the Liberty SiriusXM Group, the Braves Group and the Formula One
Group in the accompanying attributed financial information in a manner similar to a stand-alone company basis.
To the extent this methodology differs from our tax sharing policy, differences have been reflected in the attributed
net assets of the respective groups.
Liberty SiriusXM Group
Income tax benefit (expense) consists of:
Current:
Federal . . . . . . . . . . . . . . . . . . . . $
State and local . . . . . . . . . . . . . .
Foreign. . . . . . . . . . . . . . . . . . . .
Deferred:
Federal . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . .
Foreign. . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . $
Years ended December 31,
2017
2016
2015
amounts in millions
4
(30)
—
(26)
511
(19)
—
492
466
12
(21)
—
(9)
(302)
(30)
—
(332)
(341)
(13)
(18)
(1)
(32)
(252)
(38)
—
(290)
(322)
F-113
Notes to Attributed Financial Information (Continued)
(unaudited)
Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of
35% as a result of the following:
Computed expected tax benefit (expense) . . . . . . . . . . . . . . .
State and local income taxes, net of federal income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends received deductions . . . . . . . . . . . . . . . . . . . . . . . .
Taxable dividends not recognized for book purposes . . . . . .
Federal tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance affecting tax expense . . . . . .
Change in tax rate due to Tax Act . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . .
Years ended December 31,
2017
2016
2015
amounts in millions
$
(418)
(349)
(268)
(40)
36
(45)
22
(4)
888
27
466
(37)
9
(11)
67
1
—
(21)
(341)
(6)
—
—
—
(44)
—
(4)
(322)
$
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and
deferred income tax liabilities are presented below:
Deferred tax assets:
Net operating and capital loss carryforwards and tax credits . . . .
Accrued stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other future deductible amounts . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2017
amounts in millions
2016
$
$
689
78
52
500
10
1,329
(53)
1,276
23
198
2,494
8
2,723
1,447
1,379
122
72
761
13
2,347
(48)
2,299
15
319
3,893
10
4,237
1,938
F-114
Notes to Attributed Financial Information (Continued)
(unaudited)
Braves Group
Income tax benefit (expense) consists of:
Years ended December 31,
2017
2016
2015
amounts in millions
Current:
Federal . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
$
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . .
$
36
2
—
38
3
(5)
—
(2)
36
18
—
—
18
(1)
—
—
(1)
17
4
—
—
4
5
1
—
6
10
Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of
35% as a result of the following:
Computed expected tax benefit (expense) . . . . . . . . . . . . . $
State and local income taxes, net of federal income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance affecting tax expense . . .
Change in tax rate due to Tax Act . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . $
Years ended December 31,
2017
2016
2015
amounts in millions
27
22
3
(6)
25
(8)
36
2
(2)
—
(10)
17
11
1
—
—
(2)
10
F-115
Notes to Attributed Financial Information (Continued)
(unaudited)
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and
deferred income tax liabilities are presented below:
December 31,
2017
2016
amounts in millions
Deferred tax assets:
Net operating loss carryforwards . . . . . . . . . . . . . . . . . .
Accrued stock compensation . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Other future deductible amounts . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
8
2
114
13
137
(8)
129
19
126
46
191
62
2
2
16
8
28
(2)
26
1
2
71
74
48
Liberty Formula One Group
Income tax benefit (expense) consists of:
Years ended December 31,
2017
2016
2015
amounts in millions
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . .
$
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . . . .
$
(2)
(2)
(9)
(13)
64
3
507
574
561
(69)
(8)
—
(77)
(85)
(9)
—
(94)
(171)
(8)
1
—
(7)
102
7
—
109
102
F-116
Notes to Attributed Financial Information (Continued)
(unaudited)
Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of
35% as a result of the following:
Computed expected tax benefit (expense) . . . . . . . . . . . . . . . . . $
State and local income taxes, net of federal income taxes . . . .
Foreign income taxes, net of federal income taxes . . . . . . . . . .
Dividends received deductions . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance affecting tax expense . . . . . . . .
Change in tax rate due to Tax Act . . . . . . . . . . . . . . . . . . . . . . .
Settlements with tax authorities . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible / Non-taxable interest . . . . . . . . . . . . . . . . . . . .
Write-off of tax attributes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . $
Years ended December 31,
2017
2016
2015
amounts in millions
(175)
(11)
—
2
—
—
—
—
—
—
13
(171)
107
—
88
2
222
16
253
(22)
(60)
(42)
(3)
561
97
4
—
2
—
—
—
—
—
—
(1)
102
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and
deferred income tax liabilities are presented below:
December 31,
2017
2016
amounts in millions
Deferred tax assets:
$
Net operating and capital loss carryforwards . . . . . . . . . . . . . . . . . . .
Accrued stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other future deductible amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax (assets) liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
320
8
9
2
34
1
374
(51)
323
68
2
220
2
292
(31)
—
12
14
—
7
3
36
—
36
65
9
—
1
75
39
(4)
In addition to the Intergroup Note between the Braves Group and the Formula One Group as discussed in note 1,
there is an intergroup arrangement regarding the securities held by the Formula One Group pledged as collateral
pursuant to a loan at the Braves Group.
F-117
Notes to Attributed Financial Information (Continued)
(unaudited)
As discussed in note 10 of the accompanying consolidated financial statements, 464 thousand Time Warner shares
were pledged as collateral to the mixed use facilities as of December 31, 2017. The fair value of the
shares pledged as of December 31, 2017 was $42 million. Shares of Time Warner are held by the Formula One
Group. Following the Recapitalization, the Company’s board of directors approved an amount payable by the
Braves Group to pay the Formula One Group in order to reflect the credit support provided by the assets of the
Formula One Group used as collateral for the credit facility obligations of the Braves Group. The amount of this
obligation is determined and paid quarterly in arrears, based on the average share price of Time Warner common
stock each period. This inter-group arrangement is recorded through the Intergroup payable (receivable) line item
in the consolidated attributed balance sheets and through the Interest expense line item in the consolidated attributed
statements of operations and eliminated in consolidation. The total amount payable is expected to be less than $1
million each annual period.
The intergroup balances as December 31, 2017 and December 31, 2016 also include the impact of the timing of
certain tax benefits. Per the tracking stock tax sharing policies, consolidated income taxes arising from the Liberty
SiriusXM Group in periods prior to the Recapitalization were not subject to tax sharing and were allocated to the
Formula One Group. As such, the balance of the Intergroup tax payable between the Liberty SiriusXM Group and
the Formula One Group was zero at the effective date of the Recapitalization and is accounted for going forward
beginning on such date.
(5)
The Liberty SiriusXM common stock, Liberty Braves common stock and Liberty Formula One common stock have
voting and conversion rights under our restated charter. Following is a summary of those rights. Holders of Series
A common stock of each group will be entitled to one vote per share, and holders of Series B common stock of
each group will be entitled to ten votes per share. Holders of Series C common stock of each group will be entitled
to 1/100th of a vote per share in certain limited cases and will otherwise not be entitled to vote. In general, holders
of Series A and Series B common stock will vote as a single class. In certain limited circumstances, the board may
elect to seek the approval of the holders of only Series A and Series B Liberty SiriusXM common stock, Series A
and Series B Liberty Braves common stock, or the approval of the holders of only Series A and Series B Liberty
Formula One common stock.
At the option of the holder, each share of Series B common stock of each group will be convertible into one share
of Series A common stock of the same group. At the discretion of our board, the common stock related to one group
may be converted into common stock of the same series that is related to another other group.
F-118
BOARD OF DIRECTORS
AUDIT COMMITTEE
John C. Malone
Chairman of the Board
Liberty Media Corporation
Robert R. Bennett
Managing Director
Hilltop Investments LLC
Brian M. Deevy
Retired Head of Communications,
Media & Entertainment Group
RBC Capital Markets
M. Ian G. Gilchrist
Retired Investment Banker
Gregory B. Maffei
President and Chief Executive Officer
Liberty Media Corporation
Evan D. Malone, Ph.D.
President
NextFab Studio, LLC
David E. Rapley
Retired President and
Chief Executive Officer
Rapley Consulting, Inc.
Larry E. Romrell
Retired Executive Vice President
Tele-Communications, Inc.
Andrea L. Wong
Former President, International
Production
Sony Pictures Television
Former President, International
Sony Pictures Entertainment
EXECUTIVE COMMITTEE
Robert R. Bennett
Gregory B. Maffei
John C. Malone
COMPENSATION
COMMITTEE
M. Ian G. Gilchrist (Chairman)
David E. Rapley
Andrea L. Wong
Brian M. Deevy (Chairman)
M. Ian G. Gilchrist
Larry E. Romrell
NOMINATING
& CORPORATE
GOVRNANCE COMMITTEE
David E. Rapley (Chairman)
M. Ian G. Gilchrist
Larry E. Romrell
Andrea L. Wong
SENIOR OFFICERS
John C. Malone
Chairman of the Board
Gregory B. Maffei
President and Chief Executive Officer
Richard N. Baer
Chief Legal Officer
Mark D. Carleton
Chief Financial Officer
Albert E. Rosenthaler
Chief Corporate Development Officer
CORPORATE SECRETARY
Pamela L. Coe
CORPORATE
HEADQUARTERS
12300 Liberty Boulevard
Englewood, CO 80112
(720) 875-5400
STOCK INFORMATION
Series A and C Liberty Braves Common
Stock (BATRA/K), Series A and C
Liberty Formula One Common Stock
(FWONA/K), and Series A, B and
C Liberty SiriusXM Common Stock
(LSXMA/B/K) trade on the NASDAQ
Global Select Market.
Series B Liberty Braves Common Stock
(BATRB) and Series B Liberty Formula
One Common Stock (FWONB) are quoted
on the OTC Markets.
CUSIP NUMBERS
BATRA – 531229 706
BATRB – 531229 805
BATRK – 531229 888
FWONA – 531229 870
FWONB – 531229 862
FWONK – 531229 854
LSXMA – 531229 409
LSXMB – 531229 508
LSXMK – 531229 607
TRANSFER AGENT
Liberty Media Corporation
Shareholder Services
c/o Computershare
P.O. Box 505000
Louisville, KY 40233-5000
Phone: (781) 575-2879
Toll free: (866) 367-6355
www.computershare.com
Telecommunication Device for the Deaf
(TDD) (800) 952-9245
INVESTOR RELATIONS
Courtnee Chun
investor@libertymedia.com
(877) 772-1518
ON THE INTERNET
Visit the Liberty Media Corporation
website at www.libertymedia.com.
FINANCIAL STATEMENTS
Liberty Media Corporation financial
statements are filed with the Securities
and Exchange Commission. Copies of
these financial statements can be obtained
from the Transfer Agent or through the
Liberty Media Corporation website.
ANNUAL REPORT 2017
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12300 LIBERTY BOULEVARD | ENGLEWOOD, CO 80112
720.875.5400 | WWW.LIBERTYMEDIA.COM
LIBERTY MEDIA CORPORATION
2017 ANNUAL REPORT
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